Bangkok Bank first Thai bank to join R3 consortium
Bangkok Bank announced last week that it will become the first Thai bank to join R3, a New York-based consortium of 55 of the world’s largest financial institutions that develops and shares advanced financial technology, in particular a distributed ledger system for financial services firms.
“The addition of Bangkok Bank – one of Thailand’s major banking players – is a further milestone for R3. Asia is a key region for us as we expand our network of consortium members and continue to develop truly global applications for this groundbreaking technology,” said David Rutter, chief executive officer of R3.
R3 was founded in 2014 and quickly lined up nine major global financial institutions as members, including Goldman Sachs, JP Morgan, Barclays and Credit Suisse. In August, R3 and several members of its consortium successfully completed two prototypes that demonstrate how distributed ledger technology can address key challenges facing the $45 billion global trade finance industry.
Distributed ledgers are a type of database that is spread across multiple sites, countries or institutions, and is typically public. One of the goals of distributed ledgers is to save money by cutting out the middlemen in financial transactions. The transactions are also quicker and more secure.
Chartsiri Sophonpanich, President of Bangkok Bank, said that the bank is keen to learn, share and participate in the group. R3 is made up of financial industry veterans, technologists, and new-tech entrepreneurs, bringing together experts from many FinTech fields. The firm operates out of New York, San Francisco and London.
R3’s distributed ledgers were developed using blockchain technology. The consortium said its purpose is to test and deploy blockchain technologies to modernize decades-old processes and streamline operations, potentially saving billions of dollars from back-office operations.
Thailand’s banking sector was heavily protected from foreign competition prior to the 1997 Asian financial and economic crisis. Since then, the government and regulators have slowly been liberalizing the sector and opening it up to foreign players. Nonetheless, the Thai banking sector still has some catching up to do in terms of technology and liberalization.
Bangkok Bank’s move to become a member of R3 is a sign that Thai banks realize they need to make their businesses and operations more advanced to be competitive. This is especially true in light of the new national development policy called Thailand 4.0, which seeks to transition the economy towards higher technology and innovation.
FinTech is at once intriguing and a concern to Thai banking regulators. Thailand’s central bank recently said it is developing a set of regulations to govern FinTech in the Kingdom to ensure that consumers and other clients will be adequately protected.