While blockchain's journey in finance has seen its share of detours, its core distributed ledger technology—known for being cost-effective and efficient—proves that when applied responsibly and rationally, it becomes a powerful engine for the industry's digital transformation.
As a transformative technology with far-reaching potential, blockchain is rapidly gaining traction in banking, pushing commercial banks to actively compete in this new technological arena.
A Push from Regulators and Institutions
In recent annual work plans from local financial regulators, blockchain has consistently featured as a star technology for RegTech. For instance, Beijing's Financial Technology Innovation Regulatory Pilot launch meeting highlighted a focus on applying cutting-edge technologies like blockchain in future oversight. Similarly, the Shanghai Free Trade Zone Lingang New Area listed exploring a blockchain-led "regulatory sandbox" model among its annual priorities.
In fact, since 2019, regulators have been building a foundational fintech framework to promote deeper integration between finance and technology. The People's Bank of China's "FinTech Development Plan (2019–2021)" is seen by industry insiders as a crucial top-level policy guiding the future of China's banking sector. Broader adoption of blockchain in finance is expected to significantly boost both regulatory effectiveness and operational efficiency.
Following this, the China Banking and Insurance Regulatory Commission (CBIRC) issued guidelines encouraging banks and insurers to integrate technologies like IoT and blockchain into transaction processes. This allows for remote monitoring of logistics and inventory, enhancing intelligent risk control.
On the commercial bank front, data from Zero1 Research shows that from 2016 through December 2019, 15 Chinese banks filed 433 blockchain-related patent applications—a staggering 38-fold increase from just 11 filings four years prior. In 2019 alone, Chinese banks filed 284 blockchain patents. WeBank led the pack with 229 patents (81% of the year's total), followed by ICBC with 35 (12%). The remaining seven banks each filed fewer than 10.
WeBank's quantitative advantage translates to broad business coverage: its patents span digital assets, supply chain finance, payments, credit reporting, and remittances. Bank of China's patents cover digital assets, lending, credit reporting, cross-border payments, fund custody, and forex settlement. ICBC's focus is primarily on digital assets and supply chain finance. Industry experts believe merging existing bank API architectures with blockchain allows banks to build efficient, autonomous digital ecosystems. This shift enables new operational models, customer relationships, and seamless bridges between traditional products and digital services—ultimately paving the way for novel blockchain-powered digital asset products.
An analysis of major bank announcements reveals continued momentum. After China Construction Bank established the first wholly-owned bank fintech subsidiary, ICBC, Bank of Beijing, and Bank of China followed suit within the year, bringing the total to ten. Bank of China, ICBC, and CCB have all launched smart branches deeply integrated with 5G and real-world scenarios. ICBC unveiled its ECOS Intelligent Banking Ecosystem to drive cross-border and cross-industry transformation. Collectively, ICBC, Ping An Bank, Zhejiang Business Bank, Jiangsu Bank, WeBank, and Suning Bank announced 14 blockchain-based services. CCB launched its "BCTrade2.0 Blockchain Trade Finance Platform," and Ping An's OneConnect successfully listed on the NYSE. This deep fintech integration is stimulating traditional finance's supply-side capacity and elevating service quality for the real economy.
Furthermore, several commercial banks have stated they will treat 2020 as a new starting point to accelerate blockchain exploration and drive digital transformation. Ping An Bank aims to deepen the integration of blockchain and IoT to address pain points in traditional supply chain finance. A senior executive from CCB's fintech subsidiary highlighted the bank's four key advantages in blockchain application: extensive industry experience, comprehensive financial services, leading data governance, and successful government sector deployments. Going forward, CCB will vigorously pursue blockchain innovation in trade finance, real estate leasing, and housing provident fund data platforms.
Significant Challenges Ahead
Despite the progress, blockchain technology remains largely exploratory. No large-scale, typical application scenarios have emerged yet—only isolated pilots—and significant hurdles persist. Technical flaws and limitations remain, user privacy and security need strengthening, and financial regulation has become considerably more complex. Blockchain's decentralized nature creates a distributed, balanced node system, which greatly reduces the precision and effectiveness of traditional financial oversight. If regulators already grapple with massive data volumes, a blockchain environment presents "astronomical" amounts of decentralized data. Without precise tools to search and utilize this data, centralized regulators face a daunting challenge: how to process decentralized information—testing both their risk-response capabilities and the efficacy of their regulatory tools.
Liang Bin, Deputy General Manager of Jiangsu Bank's Internet Finance Department, pointed out specific issues for mid-sized and small commercial banks. First, standardization is paramount for deeper blockchain adoption. If institutions keep building isolated "siloed" solutions on different standards, we'll see a proliferation of complex, compromised, and closed systems. Without industry-wide standards, interoperability between financial institutions is impossible.
Second, identifying viable use cases is critical. Blockchain isn't a standalone, centralized system—it reaches its full potential only with multi-party collaboration and mutual benefit. While banks seek suitable blockchain business scenarios, they must also figure out how to expand their "ecosystem," attracting more partners to join their frameworks to create tangible business impact—a highly challenging task. Moreover, despite blockchain's benefits, its intrinsic characteristics still differ from core banking operations in practice.
Third, technological hurdles remain. Several unavoidable technical challenges require industry-wide collaboration. For example, transaction throughput is still constrained—consensus algorithms consume substantial resources, and as more institutions join consortium chains, transaction performance inevitably declines. Current efforts with partners are focused on breaking through these performance bottlenecks.
Other unresolved issues include consortium chain deployment and ledger migration. Failure to address these will leave numerous latent risks.
Gao Feng, Chief Information Officer of the China Banking Association, has stated publicly that blockchain is still in its early developmental phase, requiring improvements in security, standardization, and regulation. He noted that in the short term, blockchain presents a double-edged sword for financial institutions. "Some argue widespread adoption could erode banks' fee-based income, with payment services hit first as blockchain matures. Others suggest accounting firms might even become obsolete—if listed companies' projects are on-chain, external audits and notarization may no longer be needed. So, in the near term, blockchain is indeed a double-edged sword. But in the long run, commercial banks must embrace it—not just to improve efficiency, but more importantly, to unlock new possibilities."