Hitachi and the Bank of Tokyo Mitsubishi UFJ (BTMU) are collaborating on a project that would use blockchain technology to digitise cheques in Singapore.

The pair have entered proof of concept testing for a communally developed system which would be used by BTMU to settle payments from Hitachi, which is both a customer and an IT services provider of the bank.

A BTMU spokesperson tells GTR that the project is due to come online in 2018 and that as well as speeding up transaction times and reducing the manual input, it will “prevent the falsification of transaction records and enable faster settlements for financial institutions”.

She adds: “Blockchain technology provides a faster, cheaper way to process payments and other transactions. Handwritten cheques typically take about two days to clear by conventional means. With the new system, payments would go through instantly and with far less risk of fraud. We will consider future applications for settlements and supply chain finance beyond the finance sector.”

As financial services providers scramble to utilise blockchain technology, banks have often found themselves behind the curve of fintech companies that have been working in the space since its inception.

In Singapore, authorities are to introduce a regulatory sandbox for fintech generally, which would allow companies to develop their technologies without fear of breaching existing regulation. It’s within this sandbox that Hitachi and BTMU hope to develop their solution.

Banks and technology companies have been searching for ways in which to use blockchain in trade finance.

In July, IBM announced the opening of a blockchain innovation centre in Singapore in collaboration with the Monetary Authority of Singapore (MAS) and the Singapore Economic Development Board (EDB). Again, the aim of this is to make transactions more efficient and to increase cybersecurity.

Late last year, also in Singapore, Standard Chartered, DBS and Infocomm Development Authority of Singapore (IDA) developed proof of concept for a blockchain-based invoice trading platform.

As GTR reported at the time, “the solution uses Ripple’s distributed ledger technology to underpin a platform for tracking invoices, backing loans to suppliers, reducing risk of invoice duplication while retaining client confidentiality” and is the first bank-developed application of blockchain technology to the trade finance space.