Chain ID Offers Blockchain Solution For Korean Online Banking

Blockchain, FinTech, Innovation, News, Regulation | November 2, 2017 By:
Chain ID is the first update for online banking security in Korea in two decades, and the first nationwide blockchain-based banking identification system. Starting this month, Chain ID will allow users to use the same certificate across the 25 banks and securities companies that have already joined the Korea Financial Investment Blockchain Consortium.  

Chain ID was created by theloop, a company whose blockchain technology is already in use by banks, securities firms, insurance companies and hospitals. Korea has long been recognized as a world leader in super-fast Internet, smartphones and TVs, but its online banking has been stuck in 1999. In that year, when online banking was new, the government mandated the use of personal identification certificates, based on the most secure technologies available at the time.

These government issued certificates require installation of additional Windows-only software that slows down transactions, bogs down even the fastest of computers, and deters third-party software integrations. Strict regulations and legacy compatibility issues have kept these certificates in use well into the age of smartphones.

Chain ID will debut on Android and iOS devices, with desktop versions for Windows and MacOS rolling out soon after. Unlike existing certificates, CHAIN ID does not need to be registered with each, individual financial institution, or checked with a central authority like the Korea Information Certificate Authority (KICA). This is thanks to the decentralized nature of blockchain.

Min Kim serves as Chief Business Development Officer in theloop. He spoke with Block Tribune about the changes to come.

BLOCK TRIBUNE:  What effect will Chain ID have on businesses?  On customers?

MIN KIM:  Korea’s current online banking security protocols are nearly 20 years old and they’re not built for the smartphone era. CHAIN ID will save ordinary people a huge amount of time and frustration, currently spent making outdated certificates work. It’s a real issue because people can spend several minute just authorizing a simple transaction.

For businesses like securities firms and banks, there will be substantial cost savings. Much of that comes from improved security, but if transactions are easier to make, there will be less need for constant customer support.

BLOCK TRIBUNE: How long has this been in development?

MIN KIM:The blockchain engine “loopchain” that power CHAIN ID has been in development for over 2 years. CHAIN ID has been developed for around 7 to 8 months.

BLOCK TRIBUNE:  Why was it instituted? Are there concerns about KYC and AML specific to Korea?

MIN KIM: Korea has been using RSA-based online banking certificates since 1999. These were the safest method at the time and put Korea ahead of virtually every other country in terms of online banking security. The biggest problem was that these were originally tied to Microsoft’s ActiveX technology, which later became extremely insecure and was phased out. All this history though meant that there was a lot of legacy code and legacy security issues. Also, while the same certificate could be used with different banks, credit cards or securities firms, the customer had to go through a complex registration process for each site. With CHAIN ID, that’s no longer the case. Blockchain’s immutable nature means that the certificates are extremely secure and trustworthy, and the certificates can also be used across sites without any need for additional registration.

BLOCK TRIBUNE:  Tell me about the blockchain community in Korea. Is it close-knit, or highly competitive?  Is it driven by private equity, or by incubators, or other means?  Give me a sense of where things are at and potentially where headed.

MIN KIM: The blockchain community is a close-knit community of innovators. As the blockchain industry as a whole is quite new, Blockchain industry leaders continuously exchange information to keep up with the Blockchain trend. There are various Korean blockchain meetups and chat rooms where blockchain leaders communicate with blockchain enthusiasts. The Korean blockchain industry is driven by private equity and government funding. Korea is strongly pushing toward blockchain innovation.

BLOCK TRIBUNE:  I’ve been told that there has been a lot of misinterpretation of the South Korean government’s recent proclamations on ICOs and cryptocurrency. Explain where things are at and the effect on business there.

MIN KIM: That’s true, there has been a big misunderstanding within the media. Korea’s FSC proposed some regulations for securities but there is no ban for token sales in the country.  Overall, I feel many are optimistic about the future of the industry. I am generally pro-regulation and see these actions by regulators as a positive sign because it means that this is an industry that they can no longer ignore.

BLOCK TRIBUNE:  Several of the largest exchanges are based in Korea, and the market often moves based on sudden input from Korean investors. Why are South Koreans so interested in cryptocurrency?  I know, in general, Koreans are avid network gamers. Does that have something to do with it?  Is this a different form of “game” that perhaps older former gamers are now engaged in?

MIN KIM: Korea houses three of the world’s top five cryptocurrency exchanges. I don’t think blockchain interest is due to the gaming culture but to the fact that Koreans are early adopters. Korean society has a big interest in technological advances and everything that can make their life easier since they have a very busy life with a lot of overtime work.

CHAIN ID is an excellent example of how blockchain technology will be used to make daily activities easier. From this month on, Koreans won’t have to waste time downloading outdated software each time they need to make an online bank transfer, they can easily do it from their phones.

BLOCK TRIBUNE: Will the Korean blockchain industry look to expand internationally?  Or is it content to remain a player in Korea and perhaps the local region?

MIN KIM: Korea is launching many interesting projects with an international vision. Last month CHAIN ID’s sister company, ICON (whose intent is to hyperconnect the world) successfully completed its token pre-sale and sale, collecting $42M within 6 hours. CHAIN ID will start with 25 companies until reaching a national adoption. This technology can be used in other countries and we are happy to bring blockchain technology closer to people.

BLOCK TRIBUNE:  What effect has the recent sabre-rattling between North Korea and the rest of the world had on business, if any?

MIN KIM: In South Korea, we’ve gotten used to threats from the North, so I don’t think that’s what’s driving adoption of blockchain. In Q3, amid all the North Korean sabre rattling, South Korea saw its fastest quarterly GDP growth in seven years. Most of the concern is caused by international media that misinterpret facts or overreact.