The Thailand Blockchain Community Initiative is pushed forward by 14 Thai banks, in cooperation with 3 state enterprises and 4 large business corporations. With an aim to upgrade the business efficiency and competitiveness by adopting blockchain technology, this initiative will be initially implemented with Thailand’s first project of blockchain-based letters of guarantee (LGs), fully integrating the LG system worth THB1.35 trillion into the era of electronic documentation wherein the operating costs will be cut by half.
The system is currently being tested in the Bank of Thailand (BOT)’s regulatory sandbox, which facilitates the development of innovative and standardized financial products and services for maximum benefits of service providers, consumers and the Thai economy, and is expected to interoperably launch in the third quarter of this year.
Dr. Veerathai Santiprabhob, BOT Governor, said the Bank of Thailand is delighted to witness the setup of Thailand Blockchain Community Initiative which will be beneficial to banking and business sectors and a whole Thai economy. In particular, the adoption of high potential technology as such blockchain can diversely change how we conduct businesses. Participating banks will be able to share this infrastructure and technology without having to fully invest in such development individually. This will as well help achieve higher efficiency and lower costs. For business sector, Thailand Blockchain Community Initiative will reduce the complexity of connecting to the same financial services provided by different banks, facilitate the data verification on the same blockchain network, mitigate counterfeit risks, and increase timeliness as well as security. This program is also deemed to be a notable cooperation between the banking and business sectors with a common goal to boost the overall Thai economy and competitiveness of our country.
Mr. Predee Daochai, Thai Bankers’ Association Chairman, revealed that the estimated value of LGs issued via the banking system in Thailand in 2017 may have topped THB1.35 trillion, or more than 500,000 in volume, up 8 percent over 2016. Of this, LGs via electronic system or e-LG represent around 15-20 percent. Therefore, paper-based LGs still hold the lion’s share in the Thai economy, thus being a burden for both issuing banks and businesses using LGs, in terms of relevant costs and document management.
Thailand Blockchain Community Initiative - the first cooperation of its kind in the country - has been developed with an objective of using cutting-edge technologies, such as blockchain to upgrade the Thai business sector through a closer cooperation among 14 banks. These include, Bangkok Bank, Krungthai Bank, Bank of Ayudhya (Krungsri), KASIKORNBANK, Kiatnakin Bank, CIMB Thai Bank, TMB Bank, TISCO Bank, Siam Commercial Bank, Thanachart Bank, the Bank for Agriculture and Agricultural Cooperatives, United Overseas Bank (UOB), Standard Chartered Bank (Thai) and the Government Savings Bank, plus seven large corporations, including Metropolitan Electricity Authority, Provincial Electricity Authority, Electricity Generating Authority of Thailand, PTT Global Chemical, PTT Polymer Marketing, IRPC and SCG. Related technologies, legal aspects and overall picture of this initiative are supported by Accenture, Baker & McKenzie, NECTEC and IBM.
The blockchain-based LG service is the first project that has been undertaken under the Thailand Blockchain Community Initiative, based on a blockchain network to enable LG service to be more efficient, reliable and secure, with a unified information standard. The use of blockchain technology via cloud technology also offers greater flexibility for users because there are more ways that they can configure service settings to facilitate transactions and check the service status around the clock.
Mr. Predee summed up that the blockchain-based LG service is a starting point toward end-to-end paperless processes which are highly secure, easy to examine and difficult to forge. It is better than conventional methods. The LGs on blockchain can be conveniently examined anytime and anywhere, and each change will be automatically recorded. The system also allows for further connectivity to other bank and business networks envisioned for the future.