[Summit] Henry Ma of WeBank: Using distributed ledgers to optimize decentralized transactions between financial peers - WeBank's blockchain exploration

Reporter: Pencil lead

Good morning, everyone. I am very happy to represent WeBank and share with you our exploration of blockchain today. Today's theme is quite long, using distributed ledgers to optimize decentralized transactions between financial peers. These two sentences are very important. The first sentence actually represents some of our ideas, and the second sentence actually represents some of the data generated by WeBank. This demand is to help us solve and optimize through the ideas on blockchain, so it is our ideas and our needs that drive our research in the field of blockchain.

First, let me talk about the positioning of WeBank. From the very beginning, we have emphasized that we want to become a very powerful connector. We hope to connect with a large number of partners to provide better financial services and to serve smiling enterprises and the general public.

In this diagram, I think we can see that there are four major groups that we connect with, including some large Internet platforms. For example, Tencent's WeChat and QQ, and we also connect with a large number of non-bank financial institutions. Because everyone is a provider of a large number of financial products. Of course, a very important point is that in our main business of small and micro loans and consumer finance loans, we also have a large number of cooperative banks to carry out the so-called joint loan business with us, so they are also the objects of our connection. We also have many bank peers, and we have carried out a lot of peer cooperation with them. Starting this year, we are promoting our micro-power and product private chain to promote a very close cooperative relationship between our peers through technological cooperation.

In terms of the entire business layout, one of our important positionings is to become a connector, but we do not want to be a center or we do not want to be the only center. So here comes the so-called non-centralized transactions between financial peers. So this is still a different concept from decentralization. As a connector, we hope to have a better mechanism to support our non-centralized transaction system between financial peers. So we have been exploring whether there are some good mechanisms to truly support our business positioning. So this is our demand for business positioning.

Another very important point is the first sentence of our theme, which I just mentioned, distributed. As an Internet bank, we have placed our core accounting system on a distributed architecture from the beginning, which is a pioneering practice in the banking industry. Our customer data and encrypted data are divided according to customers to ensure that the data is distributed on different nodes. But at the same time, we also provide bank-level stability and reliability for distributed transactions in the architecture.

We use the core distributed database technology. Under the distributed database technology, we can also see that our data is already a set of mechanisms for multiple copies, and we can use the core database technology. This is a system that we developed in close cooperation with Tencent. We also ensure the smooth flow between database copies. So distribution can be said to be a demand based on our internal demands, concepts and business positioning. Our concept coincides with that of Devcon blockchain.

We have carried out a lot of exploration on blockchain. Of course, while we see the development prospects of blockchain, we also see its own limitations. I just heard Brian Behlendarf talking about the creation of the Internet in 1997, which is similar to the status of blockchain. I personally feel the same way, because when I saw the prototype of the development of the Internet in 1994, it should be very similar to the stage where our blockchain is now.

We can see that the current blockchain technology, in reality, is not ready for large-scale use, and we still have many problems to solve. As several guests, including IBM guests, mentioned earlier, there are many problems to be solved in terms of privacy and security, which is a reflection of the high degree of integration capabilities. Because we are not talking about a single technical capability, we need to effectively integrate multiple technologies to truly promote the implementation of blockchain, so this is a test of our integration capabilities. At this stage, we still have a lot of work to do.

Secondly, we believe that the concept of alliance chain should be more feasible in the implementation of financial institutions. Finance has very high requirements for security, especially in China, where the scale of transactions is also very large, so it is completely dependent on the existing supply chain system, a very complex public and private system, which has been deployed in many aspects. Therefore, we believe that the alliance chain should be a more reliable and feasible approach for the real implementation of blockchain in the financial field.

The third aspect is very important. What should we put on the blockchain? As a financial institution, our core business is bookkeeping. So we think that what should be put on the blockchain is the ledger or a copy of the ledger that we and our partners jointly maintain. This is what we think is the most core part of the content on the blockchain.

Ultimately, if blockchain can be truly implemented, it will indeed bring very obvious benefits. We believe that in the business scenarios we just mentioned, we need to cooperate with a large number of financial partners, and there will be many clearing and settlement process links in the process. If blockchain is truly implemented effectively, we can greatly improve the cost and efficiency of clearing and settlement. We believe that this direction should still be adhered to and promoted firmly.

WeBank actually has four aspects in blockchain deployment that we think we will focus on. The first aspect is still in the field of technical research. We believe that Baas technology is a very core aspect of blockchain technology. I will share with you our work in this area later. The second aspect is that since we have determined that alliances are a key direction for our development, we believe that we need to form alliances with more peers, so we also established our blockchain cooperation alliance this year.

The third aspect is that what will be stored on the alliance chain between institutions will be the ledger of transactions between institutions or a copy of the ledger.

Fourthly, by utilizing the blockchain features of distributed ledgers and smart contracts, peers can effectively reduce the cost of clearing and reconciliation, improve timeliness, and simplify and speed up transactions between various decentralized financial institutions.

In terms of technology research, we have taken the most important step in the cloud service of the alliance chain. Although the blockchain is an innovative technology system, many technical frameworks will not change after so many years of development of IT information technology. Therefore, in terms of IT technology architecture, we still believe that although there is blockchain, our structure will remain unchanged. Therefore, we still need a very stable physical layer to provide these infrastructure services, and then we will have the logic layer of the blockchain, such as smart contracts. With a solid foundation, we can really develop more blockchain application services. Seeing that there are already cloud services on the infrastructure, such as Tencent Cloud, a close partner in the foundation, it has already provided the architecture service at the IaaS level. We are now focusing on the development of BaaS blockchain cloud services, and we have already started trial use in our Memorial Alliance in the past two months, for the alliance chain scenario.

We believe that only by building a good service at the BaaS layer can we develop more abundant BaaS application services and truly expand to this level. At the BaaS blockchain cloud service level, we focus on optimizing several aspects. The first is node identity authentication, which is a key point. In addition, based on a certain public-private mechanism of mutual trust, we hope to greatly simplify our consensus algorithms such as POW and POS on the public chain, and then find a mechanism that is suitable for our alliance chain company. For example, TBFG and other companies can improve their efficiency. Of course, there is another important aspect, how to define financial assets on the blockchain, and what content should be placed? This is also an aspect that needs to be studied in cloud services. Of course, several people, including IBM and several guests, have also said that we still need a lot of supporting tools to quickly expand these applications, so graphical tools are also a focus of our research. Of course, deployment on the cloud is also a very critical part. We believe that through cloud deployment, we can really quickly implement our blockchain applications.

The second aspect is the industry connection. On May 31 of this year, the Financial Blockchain Cooperation Alliance, referred to as the Golden Chain Alliance, was established in Shenzhen. The main positioning is to truly promote financial peers, including banks, insurance, funds, and securities companies, to participate in the technical research of blockchain through a non-profit organizational structure. At present, we have more than 50 members in the Golden Alliance. According to the latest data, we have 60 financial institutions, as well as these Internet financial institutions, and some of their own companies have participated in our alliance. The concept we uphold is similar to the Bletchley blockchain. We hope to truly achieve equality, cooperation, openness, and sharing. This is also the hope to establish a very equal cooperative relationship with partners in business.

Our vision is to reflect the most important technical research in the alliance, to truly define standards, and to leverage the technical resources in the alliance to achieve mutual benefit. Of course, it is very important that with this alliance, it will be more conducive for us to explore some landing scenarios, and ultimately to truly apply blockchain in the financial industry and financial field to realize landing cases.

In terms of scenario exploration, our leading product at WeBank is our Weilidai. Last month, this product was a consumer loan for individuals. So far, we have more than 10 million customers, issued 10 million loans, and the amount of loans issued has exceeded 100 billion. In terms of this scale, the important background is that our funds are jointly developed with more than 20 partner banks. This joint loan model is actually a bit like the syndicated loan for corporate business in the past. When we apply this concept to the scenario of small and micro loans, it actually has a very reference significance.

In traditional practice, WeBank maintains our ledger, and our partner banks also maintain their ledgers. The usual practice is that when each user delivers a document, we put the ledger on our blockchain, so that we can maintain a set of ledgers together with our partner banks, and in the process we can achieve a real-time clearing object. All account information can be transparently provided to our partners in real time.

In fact, our joint loan system has been officially put into production this month. This system was developed jointly with Shanghai Huarui Bank, a cooperative bank of our joint loan micro-loan. Huarui Bank is also a member of our Golden Chain Alliance. Currently, this system has begun trial operation. Of course, we believe that this is just a small beginning. In the future, we will explore more scenarios and incorporate more of our cooperative banks into our system.

Finally, let's talk about our strategic cooperation. Mr. Xiao also mentioned that we will have a very close cooperation with Wanxiang Lab. We hope to bring together the technical resources of both parties to truly play the role of "1+1 is greater than 2". We will jointly build the platform and basic bottom layer of the agreement. At the beginning, we will still focus on the security authentication during the node period on the alliance chain mentioned earlier, and we will also study the public and private algorithms of the alliance chain on the basis. Of course, we will also focus on some permission systems on the ledger, which is also a focus of our attention. We will also apply more resources to data privacy to jointly develop the bottom layer that we both agree on.

Our vision and goal is to hope that both parties can really bring into play the power of our base and accelerate the development of our blockchain more quickly through the investment in base. WeBank has positioned itself as an explorer of financial technology since its inception. If you have watched American TV series, there should be a very famous saying, "WeBank GO WHERE NO ONE HAS GONE BEFORE". We have always put this sentence in the philosophy of our banking team. We hope to make new explorations and promote new explorations to promote the development of our industry and even the entire digital society.