Shinhan Bank has begun preparing a mid- to long-term roadmap for a "deposits token" business. With phase two of "Project Han River," a central bank digital currency (CBDC) initiative led by the Bank of Korea and commercial banks, approaching real-world transactions, the bank is moving to craft a full-fledged commercialization strategy.
On the 19th, Shinhan Bank sent a request for proposal (RFP) to related firms to conduct consulting on identifying and expanding new deposits token payment businesses. Through this consulting, Shinhan Bank plans to develop a new business model for deposits token payments and establish a mid- to long-term business roadmap.
A deposits token converts bank deposits into a Blockchain-based digital token for payment. Users pay with deposits tokens through an e-wallet application, and merchants can use existing card terminals and online payment systems without building a separate payment network.
Shinhan Bank will analyze the market environment for deposits token payments and review demand by industry. Based on this, it will identify applicable models for deposits token payments and draw up a phased commercialization roadmap. It also plans to establish measures to enhance the promotion and execution framework for commercialization.
In particular, it will also develop a business model based on the results of phase two of Project Han River. Under Project Han River, the Bank of Korea issues a Blockchain-based wholesale CBDC, and commercial banks issue deposits tokens based on it for users to utilize in payment and settlement.
CBDC is used for interbank settlement, while what consumers use is a deposits token that converts their own deposits into token form. Its value is the same as existing deposits, allowing deposit protection, while also enabling the use of Blockchain-based smart contract functions.
If phase one checked the deposits token payment system, phase two focused on building a payment environment usable in everyday life through person-to-person (P2P) transfers, biometric authentication, and linkage with existing payment infrastructure. The banking sector expects this project to yield a business model in which bank applications evolve into payment platforms.
Real-world transactions in phase two will begin as early as September. In step with this, Shinhan Bank is moving in earnest to put deposits tokens into use. Shinhan Bank plans to complete the consulting by the end of the year.
The Bank of Korea, the Financial Services Commission, the Korea Financial Telecommunications and Clearings Institute, and commercial banks are in the final stages of preparation for phase two real-world transactions under Project Han River. Participating banks have increased from seven in phase one—KB Kookmin, Shinhan, Hana, Woori, NongHyup, Industrial Bank of Korea, and Busan Bank—to nine, with Kyongnam Bank and iM Bank added.