Japan-based electronics company Hitachi Ltd. and the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) announced today that they have partnered and started Proof of Concept (PoC) testing for using blockchain technology for check digitization in Singapore.

According to the official release, the PoC testing consists of a system developed by Hitachi and BTMU that uses blockchain infrastructure in issuing, transferring and collecting electronic checks. With the help of the system, some of Hitachi Group companies in Singapore receive the electronic check, issued and settled by BTMU, and deposit the funds.

“In recent years, various efforts towards providing new financial services that utilize blockchain technology and making financial services more efficient have been accelerated. Blockchain is a technology which makes difficult to tamper the data, sharing the data related to processes among multiple computers over networks. With applying blockchain technology, it is expected to reduce system investments and to realize providing reliable and convenient financial services,” the release stated.

The partners, with the help of PoC testing, will be able to identify issues related to various perspectives like technology, security, operation, and legal perspectives, among others. Also, it aims to realize new fintech services including digitalization of checks.

The digitization of checks enables to automate workloads of intermediaries for checks in financial institutions in order to speed up the process of settling checks by avoiding tampering. Also, similar approaches are expected to be applied to payment and supply-chain finance in non-financial sectors in the future.

The Monetary Authority of Singapore (MAS) recently released a consultation paper in June this year on ‘Finech Regulatory Sandbox Guidelines’ in order to facilitate fintech service advancement. The present PoC testing, with the help of the released framework, aims in using blockchain to identify issues for practical use, issuing and settling check on the system that is developed by the partnered companies.

“Based on this PoC testing, Hitachi and BTMU will increase efforts towards putting blockchain technology into practical use, and will contribute towards the global expansion and evolution of financial services,” it added.