How OCBC’s blockchain expertise is powering Singapore’s digital currency ambitions

OCBC is aiming to commercialise one or two of its blockchain solutions in 2024.

Conference-goers who visited OCBC's booth display during the Singapore Fintech Festival 2023 were in for a treat: they were the first to get a taste of how the Monetary Authority of Singapore (MAS)’ central bank digital currencies (CBDCs) could be used for instantaneous interbank settlement. Visitors were able to avail of 5 Digital Singapore Dollars from OCBC, which they were then able to spend at the UOB booth. The Digital Singapore Dollars were issued by OCBC and UOB and are fungible across each other.

Whilst such digital novelties may seem routine to a country where almost 1 in 2 payment transactions are done electronically, the real magic lies behind the scenes: atomic settlement. Institutions– in this case, OCBC and UOB– will no longer need to wait days for the transaction to be settled in the back end. It can happen instantaneously.

What enabled OCBC to build up and become a main participant in Singapore’s CBDC ambitions is its expertise in blockchain technology: from a strong in-house team and blockchain platform, to an emphasis on testing and experimentation. Such a setup and culture have enabled the bank to create a range of use cases, such as tokenised assets and blockchain payments, Metaverse, NFTs, and even document version tracking.

Ravindra Kumar, Head of Emerging Technology and Ecosystem at OCBC, shared their plans to further scale blockchain-powered solutions in 2024 with at least one or two of the blockchain projects they featured at the event.

“By next year, we hope to at least commercialize one or two of the prototypes showcased during Singapore Fintech Festival,” Kumar said. “Some of the potential areas of opportunities for commercialisation include asset tokenisation, cross-border FX payments, Purpose Bound Money and more.”

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Interoperability
Perhaps one of the precursor technologies to build up to OCBC’s role in helping develop Singapore’s upcoming wholesale CBDCs is its exploration of cross-border FX payments. This was not just built on blockchain but solved one of the biggest issues in blockchain technology right now: interoperability.

Kumar shared the use case developed between OCBC in Singapore and BNY Mellon from the USA. Each financial institution had their own private blockchain, one in Singapore and the other in the USA, which they tested to demonstrate the interoperability of the two blockchains.

“We did a trade, an FX payment, where the two blockchains could “talk” to each other and do an exchange of the money in a transparent, immutable manner.  This is one of the biggest problems of blockchain: there are various blockchains, and they don't “talk” to each other, they are not interoperable today. We wanted to test whether we can interoperate,” Kumar shared.

To enable this, OCBC built Blockchain capabilities from the ground up. Now, the bank has its own in-house infrastructure that supports interoperability of blockchain.

Instant and In-House
More than interoperability, OCBC’s development of blockchain solutions has formed the pillars in current banking technology available that will allow wholesale CBDC to flourish in the future. Chief of this is instant settlement and clearing.

“In the past, settlement can take days and hours behind the scenes, which we [retail consumers] don't realize. Blockchain, if we do it right, it can mean atomic settlement. You don't have to do clearing and settlement for three days. It’ll be instant,” Kumar said.

Beyond instant settlement, OCBC is also making use of its blockchain technology to support its employees. Kumar shared that employees of the bank have a dedicated online app where they can view, share, and sign documents, all while ensuring that they are viewing the latest copy of the said document. 

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"We first notarize documents on the blockchain. After that, what happens is, when I receive the document, I have my staff app. I can scan a QR code, and it will tell me whether I have the latest document. This is something big and efficient, because we have thousands of documents in OCBC,” he explained.

They can even receive special NFT art to commemorate milestones in their career and in OCBC’s unfolding history.

The bank has minted 27 collections of NFT. Such collections span across collectibles, payment wallets and awards, amongst many others. Gamification is a big theme for NFTs, with selected collections being tradable and/or redeemable for rewards. Retiring employees can also transfer NFTs to their own personal wallets –on external blockchains – as a keepsake.

The future
Beyond the CBDC pilot, cross-border and cross-currency FX payments, and its in-house app for employees, OCBC is continually exploring ways to use blockchain in its services.

“We are constantly looking out for more and more use cases for our customers as well as for our employees,” Kumar said. For example, OCBC is exploring its use in asset tokenization: first beginning with financial products, but eventually branching out to tokenizing real-world assets.  

“All those kinds of things, we can tokenize and then we can fractionalize,” Kumar said.