EY and DBS Bank Joint Report: China is poised to dominate the financial technology and blockchain markets in 2017 (Download the full report)

Ernst & Young (EY) and Singapore's DBS Bank (DBS) released a new report, "金融技术在中国崛起——重新定义金融服务" (download the full text). The report focuses on China's unique, vibrant and rapidly developing financial technology (FinTech) ecosystem, while analyzing the key factors driving the explosive growth of financial technology in China, including blockchain.

The report points out that in mainland China, blockchain projects are largely associated with academic and research institutions. In the past, many international banks that are exploring blockchain technology have been reluctant to enter the Chinese market.

However, these international banks are increasingly interested in the Chinese market, partly because of the Second Global Blockchain Summit held in Shanghai in September 2016 and the fact that China's Ministry of Industry and Information Technology has formed a special government-industry working group to develop a plan to promote the development and adoption of blockchain technology. In addition, China's Ministry of Industry and Information Technology has also released the "White Paper on the Development of Blockchain Technology and Applications in China", which defines finance as the first application area of ​​blockchain technology, specifically in payment, asset management, securities, clearing and settlement, and user identity recognition and other sub-scenarios.

A recent survey estimated that FinTech investment in blockchain technology reached $1 billion by the end of 2016. This represents an exponential growth curve, as venture-backed blockchain and Bitcoin companies saw investments grow from $3 million to $474 million between 2011 and 2015.

China's blockchain market has also achieved a series of development results and established several blockchain alliances, such as:

The ChinaLedger Alliance — which includes regional exchanges, LeEco Finance, Wanxiang Blockchain Experiments and others — aims to create an open source blockchain protocol for China to support an “Internet of Everything.”

Financial Blockchain Cooperation Alliance (Shenzhen) - Its members include Ping An Insurance, Huawei, Tencent and other companies. The alliance intends to cooperate in the development of a wide range of blockchain projects, covering areas such as capital market technology, stock exchanges, trading platforms, banking and life insurance. The alliance aims to create a prototype securities trading platform, while developing credit, digital asset registration and invoice management services.

Qianhai International Blockchain Ecosystem Alliance - The alliance aims to create an efficient ecosystem for the development of blockchain technology and its applications by combining domestic and foreign talents, technology and capital. Its members include Microsoft, IBM and the Hong Kong Applied Science and Technology Research Institute (ASTRI), hoping to accelerate the commercialization of blockchain research and development, while promoting the application of blockchain to support China's social and economic development.

These blockchain development attempts are still in their infancy, and some proofs of concept are coming, but there is still a long way to go before wider adoption and implementation. As blockchain develops in other regions, these pain points of current blockchain platforms will hinder the adoption of this technology. Challenges include: there are some difficulties in integrating blockchain with the current ecosystem; lack of security protection for application data, logic and operating environment; trust and protection of personal and corporate privacy.