Shinhan Bank, South Korea’s second largest commercial bank by total assets, has entered into a partnership with telecom giant KT in order to jointly build a blockchain-based service, The Korea Times reported.

The bank has signed an agreement with KT to develop a blockchain platform with the goal of leveraging local governments' recent efforts to introduce digital vouchers, which can be used like cash in certain regions.

Under the agreement, KT will provide its technical expertise to set up the platform and network infrastructure while Shinhan will focus on developing related financial services such as payment and account systems within the blockchain platform.

"Shinhan's strategic partnership with KT is a part of our efforts to introduce a convergence between finance and ICT," said Shinhan Bank Digital Strategy Department head Jang Hyeon-ki."The blockchain technology will upgrade customers' financial activities to a new level."

Recognizing the potential of blockchain technology, Shinhan has set up a blockchain research center under its Digital Strategy Department. The bank is working on an integrated certification system for various financial activities such as online wire transfer and foreign exchange.

KT is also actively involved in the blockchain space. It is operating a blockchain taskforce since 2015 and recently showcased a blockchain-powered commercial network, capable of handling 2,500 transactions per second (TPS).

"The partnership with Shinhan Bank will be an opportunity to expand the boundaries of KT's blockchain technology into the financial sector," KT Platform Service director Kim Hak-joon said. "KT will continue doing its best in contributing to the nation's blockchain industry."