Hyperledger Foundation Hyperledger Global Forum 2021, 11 Jun 2021

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From YouTube: Automating Government Policy Loan Process Based on Hyperledger... - Kyusang Lee & Do Hyung Kim

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Automating Government Policy Loan Process Based on Hyperledger Fabric: Reducing Cost and Improving Customer Experience - Kyusang Lee, Samsung SDS & Do Hyung Kim, Shinhan Bank

Speakers: Kyusang Lee, Do Hyung Kim
A policy loan is a type of government loan that funds small businesses through commercial banks by compiling government and related institutions' budgets. Despite the purpose, the disparate loan process between organizations causes heavy workloads. Customers also face the inconvenience of visiting the organizations several times for the application. Samsung SDS and Shinhan Bank developed a loan management platform based on Hyperledger Fabric to provide practical benefits for both organizations and clients. By automating the process, Shinhan Bank can reduce 12,000 working hours per year, and clients also expect shorter loan application time without visiting institutions. The platform also eliminates the risk of a data discrepancy. This session describes the business process and why blockchain is applied. It also discusses tangible benefits, technologies used, and lessons learned.

Sessions Details & Slides (if available)- https://sched.co/j3b0

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Hyperledger – Open Source Blockchain Technologies

Hyperledger is an open source community focused on developing a suite of stable frameworks, tools and libraries for enterprise-grade blockchain deployments.
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A

Hi everyone, uh I think uh it works, I think it works.

B

Yeah, I hope that works.

A

Because the moderator uh is uh supposed to talk something and introduce about ourselves, but it seems that he can't say anything and he can't hear from us. So uh we think we have to start with ourselves, but they should record ours. But uh okay, okay, anyway, uh welcome to something else: there's a china band session and thank cliff and welcome everybody, and thanks for joining the session, I'm kim sung li head of blockchain research lab in something sds. Please call me ks during this session because it is simple to call me.

A

I'm a leading, blockchain, research, lab and related topics uh consists of option transactions and blockchain platform technologies, which we are going to discuss it in this session. As you see, I'm with andrew kim at xenon bank andrew, please introduce yourself.

B

Thank you ks hi. This is andrew, I'm a blockchain project manager at china bank. I briefly introduced china bank for those who are not too familiar with the company. China bank is a leading commercial bank in south korea with strong digital innovation dna.

B

Ever since 2017, we have been made numbers of blockchain projects to improve the banking process. I'm very excited to share one of those topics with you here today.

A

Yeah I'll be too interviewed uh in this session, we are going to discuss a blockchain project to automate a government policy law. China bank launched the project last year as a business owner and something else. Yes, my company provided blockchain technologies for the project. We will share the experiences that we got through the project.

A

Again, we are very happy to share that with you and the community. So here is the plan uh hold on a second.

A

Andrew from china bank will introduce the overall project. It will then explain why they chose the blockchain and practical challenges they met. When they tried to use it, then I will explain the specific blockchain technologies to meet business requirements. Finally, we will deliver platform details and benefits, and here now is andrew kim at cnn bank andrew. Could you start okay. Thank.

B

You again chase so most of the audience here today, probably thinking right now. So what exactly is government policy loan? Just briefly explaining? It is a type of government loan specific for small immediate, including mom and pop stores to encourage their entrepreneurship and innovation.

B

Unlike other bank loans, money for policy loan comes from government institution banks only act as a distributor of this loan indicate. In this case, money comes from semas, which stands for small enterprise and market service. Samus is the biggest government institution who fund fully funding the policy loan. However,.

A

B

Keep in mind that police loan is not a single product. Funding institution could be different depending on the types of the policy loan. After coveted 19 demand for police known significantly increased because it has a lower interest rate and more flexible period of return.

B

In the next slide, I will explain how the policy loan used to work before the platform. So, let's imagine you are a restaurant owner who needs a government policy loan to pay for the salaries.

B

First, you have to go to the institution office to apply for the hard copy confirmation letter. The letter proves that you are eligible for the policy loan, the incision check your credit rate, size of sales, number of employees and etc, and they they check if you're eligible or not after that. You also have to visit the credit guarantor office to get guarantee approval letter just to get these two letters ready. It usually takes a week or two once these two letters are ready.

B

Now you can finally come to the bank office to apply for the loan from there. You also need to wait another two weeks to get the loan. As you can see, the process was paid for for both customers and a bank. Customers have to make three to four visits to institution credit, guarantor and bank, because there are three brand channels. Customers often got confused with the process and it led to a terrible customer experience.

B

Also it usually 22 days to complete the loan, which is two times longer than the other loans in average. Three channels also mean that there are three different databases: data input, data exchange and data. Reconciliation between parties was all done by manually by hand excessive amount of access, spreadsheets re-lookups were necessary.

B

The worst part is that most of the data was delivered through emails, phone calls, faxes or otherwise you have to upload the excel files on sema's website. This definitely led to data discrepancy and privacy issues.

A

Yes, I think it must be very complicated and not efficient at all, for both users and institutions.

B

Yes, that is correct the issues and the drawbacks of the government policing. One policy loan was very clear, so just in one word getting a policy loan was painful, it was too confusing. It was too complicated and it finally took too much time.

B

Obviously, customers satisfaction was very low than other other loans, in average from the bank's aspect. It required too much risk and cost. Moreover, it lacks scalability.

B

If a new loan and new incision want to operate the policy zone, it requires excessive amount of id development and integration after cov19, more customers wanted to get the police loan, so the needs of the platform was higher than ever.

B

In the mid 2020 last year, the project was initiated with three goals. First, we wanted to unify trainers, so customer doesn't have to visit several different institutions.

B

Second, we wanted to cut down the number of a visit to one third, we wanted to automate the most of the procedures and eliminate the manual work.

B

We concluded that building a blockchain platform is the most effective way to solve these problems. Yeah.

A

I think you made a good choice at the time. Yeah.

B

We made a good choice, but we knew blockchain was great, but soon we faced few challenges.

B

No deployment was not easy for bank, since we did not have a such an experience. Also system stability was another issue, so we wanted to find a way to use kubernetes for deployment and management. Lastly, network regulations- standard in bank is very high. We wanted to build a very safe and stable external network to meet this standard.

B

We partner, who could solve these problems and who have experience um next, is why we chose samsung sds as a partner.

A

Yeah. Thank you again.

A

I agree with the china's pain point, but in addition to the china's comments, I would like to share more voices from the customers who want to use the blockchain the first one is that I want. I know what the blockchain is now thanks to bitcoin, ethereum and nfg, but it is still difficult to use.

A

The second one is similar to the first one we figured out user wants a simple way to use blockchain, for example, they want to use graphical interfaces.

B

Yes, because because they needed a platform, we wanted it to be very easy to use and explain with graphical interface.

A

Yes, gui is very important and the third one is like blockchain deployment is hard, but when it comes to operation and network management, it becomes really hard. I think it is because blockchain use cases in real service have increased. So I think that's a good sign. The last.

B

A

Is that users want to maximize benefits from the blockchain? Of course they are, for example, questions. I frequently got. uh What can I do next with blockchain or how can they easily expand business with blockchain? So we've decided to develop blockchain technology to provide simple and easy instructions through web interfaces.

A

So also we decided to utilize kubernetes for network deployment and management for better services as a result on the right side. Here here is an example of technology.

A

Not only users can easily control and monitor the network, but also they can expand, expect business expansion through gui very easily. Okay, let's take a one step to understand what the technology is and how it works.

A

The left side we call next ledger manager, provides web-based graphical interfaces for users, so users can easily comment to the server to configure and deploy the battery network to the interface. So on the other.

B

Side of figure.

A

A server part receives a transmission from client, of course, in a server the deployment module here- control, kubernetes jobs, for example- it does creating or managing parts. You can see the peer order.

A

I mean ca parts in the blockchain network, so, on the other side, administration module is in charge of configuring and managing blockchain component. Examples are creating channels or adding on olg or install some chain code, and what one good thing is the ability to check the status of all network by monitoring module here.

A

So it's a little bit more detailed architecture, and I don't want to go in detail, but I just want to mention three things. First, one is the fabric version.

A

Since last year we've supported the fabric version to point x, so users can benefit from the lastest fabric features such as enhance the private data collection or chain code life life cycle management. Second, it supports web-based sdk and wallet. It means that a web-based sdk enables web interfaces and browser wallet. However, the browser wallet here is optional, so users can use a hardware wallet. Instead, I mean, if they, if they want last one is kubernetes users can take advantage of all features from kubernetes.

A

It includes network provisioning, high availability and scaling. In addition, as mentioned, continuous status check for blockchain components are available, so we, our users, can complete blockchain network provisioning in minutes, and even though there are some requests for upgrading or changing network configuration, it could be quickly done.

A

In addition, users users can deploy network component even in multiple network environments. You know that blockchain consortium consists of many different organizations.

B

It usually does yes.

A

For example, we observed enterprises and banks, like you in the finance financial sectors. I want to use um on-premise network.

B

That is correct. Bank, usually prefer on-premise network rather than cloud yes, just for the security issues, yeah.

A

And then I I know that there is a regulation.

B

A

That yeah, yes so, but on the other hand, I t companies may want to use public cloud, so we believe that the hybrid cloud provisioning future can satisfy a response with different needs. So let's see how it works. So first we will create up here uh we to create a peer. We need a name and a date type and fabric version and order name and some other informations then put some password and just click.

A

That's done. We just created appear using 180 that was easy yeah. Then we will deploy the chain code first package and appear nodes to be installed. uh We have to approve it according to chenko the life cycle management.

A

So it is the process of approving the chain code. We need to put some name and some other information to approve and that's done and the last one is committing the chain code.

A

So that's it just we went through the thing called life cycle management with graphical interfaces. It.

B

Still says, ks explain, adding a pure node and deploying the chain code was quite easy during the process. Yeah.

A

After provisioning, users can monitor over all blockchain network status, the left figures show the network status, for example, the number number of active peers and the height of blocks. The right side is the example of the administrator page of a business owner like china.

A

Excuse me, the page can have more business related features such as the number of applications submitted today, but something like that.

B

Yes, this page helped us to monitor the network in a class, so we use it very often.

A

Good, so uh we provided this technology to xinhan as they easily wanted to provision and manage the blockchain network and xenon. I think it shouldn't add it move blockchain and business features to the platform. Is it right? Yes, it is right yeah, so they uh with that they built a platform uh called the government loan policy government policy law platform right yep. So I think you could explain the platform better sure yeah.

B

I was explaining how to explain how the platform works and how platform changes the policy loan process on september 2020, which is last year, we finally launched the blockchain base more specifically hyperelectric fabric-based government policy loan platform to connect data among participants in real time, thanks to samsung sds next letter and network management technology, the project could be complete smoothly within four months, which is quite shorter than other blockchain projects we have experienced.

B

Now the customer does not have to make several visits.

B

We have signed a consignment agreement with semas, so we could issue a confirmation letter on behalf of the semas prior to the platform data of confirmation letter application was delivered to semas only once only on every monday and thursday. Only, however, after the platform, this data can be delivered on real time at any day.

B

I'll go through the example. Really kick so as soon as the loan officer at banking branch at china input the application data into blockchain platform same as they can check and approve the confirmation letter right away through the platform. There is no need to exchange spreadsheet going on between this allows one assignment to be operated in real time as well.

B

The biggest change is that you do not need to email and download excels full of three lookups, as I mentioned I'll talk about how the automation was possible in the next slide.

B

Okay, so this slide shows the examples of how we use event listener feature to automate the loan process, particularly repayment schedule for policy loan customer has to repay certain amount of loan every quarter before the platform chinan and cms. We have our only payment scheduled data, because data input was done by hand. There was already some issues with data discrepancy, but now there is only one unified repayment schedule, data and the platform, as you can see, act as a data breach between xin and bank and the institution just go through the example.

B

Once the request of the loan on location triggers the institutions, internal batch program through event listener to verify and confirm the allocation data. Then platform updates this data and create the payment schedule right away.

B

This allows process to eliminate emailing and uploading of repayment schedule. Access spreadsheet and some other tedious vlookup works.

B

And also as you probably everyone here knows, that deleting data is not an easy process when you apply blockchain, we believe that fabric could help us get through this issue, because this is a long platform. It has to comply with many different regulations and then to comply with our guidelines: the bank skyline, the institution, the sema, skyline and also gdpr.

B

To solve this issue, we created our key to isolate pdc data. With the letter data, you could understand pdc as a couchdb, where you can manually or automatically delete the data and let your data as its name implies it's a blockchain. So you cannot change the data here, personal data and financial data because they are private data.

B

They are saved in the pdc, while repayment data they are saved in the letter where you cannot change, it think our key as a hash data hash, it's hashed and it's used for one time: access code for repayment data.

B

This help us to prevent data abuse and the creation of the data does make us to comply with the gdpr once the loan is fully repaid. All data in pdc could be is can be deleted.

B

So finally, here are some of the um business benefits we have experienced in the last eight months after the platform launch. We definitely see higher customer service. I mean it's obvious. Customer visits are now down to one. They don't have to go back and forth and ask the the banking branches what they can do.

B

We also integrated confirmation letter application process into our banking mobile app. So it means that customer now doesn't even have to come to the office. They just can apply for the confirmation letter on their mobile phone. Now. The time period of loan process is down to 12 days from 22 days.

B

We are so. The china also enjoys the benefit of the platform ecosystem, because most of the loan process is automated. As we mentioned in the previous slides, we could cut down 13 000 working hours per year. As our platform successfully runs. We see increasing numbers of banks and other institutions who want to join the platform.

B

Two more commercial banks in korea are now in talk with us to join the platform. It will be the first use case in korea for bank to earn such profits running the blockchain platform.

A

I think it is very impressive because uh you just measure the number, because I know that it is very not easy to find some quantitative outcomes from the blockchain product and the number is too high. I mean 13 000 working hours cut down, that's very impressive. Yes, it is yeah uh and I would like to add some benefits from the technology. First, users can reduce deployment and configuration cost thanks to dynamic network provisioning.

A

You will know.

B

A

Provisioning requires somewhat iterative and complex and error-prone tasks.

A

Second, users can have more natural choices, for example, they can use public cloud hybrids on-premise, whatever the last one is related to operations, so operators can easily check the status of networks, so they can respond to the emergence, such as legal resources and service outages, and I like to mention that we also observed a resource or location for blockchain are very important.

A

So, okay, uh here are some key takes away. You want to deliver andrea. Could you summarize it sure.

B

So you might think it is inefficient to integrate blockchain into banking service, because bank bank structure is very complicated and it's full of legacy system.

B

We are very aware- and we have very experienced- that we try to apply blockchain, but it took too much time and too much risk, but now, with the hyperactive fabric next letter and other supporting tools integrating blockchain into banking system, I think it's easier than ever right now, just as the example, we showed the government policy loan.

B

I hope you're too looking for a service with the multilateral structure business to apply blockchain. This kind of a business model will bring you the dramatic changes in both customer and company as aspect okay. Thank.

A

You and from the technical side blockchain, I would like to mention this. One blockchain configuration and management are somewhat complex and complicated, but I believe making it easier for users is the key to business production. Yes, okay,.

B

A

We hope this session was a helpful toolbox of business and technical side and thank you thank you for the training session and feel free to ask any question, and I wonder that cliff is online or- and let me just yeah, okay, okay, okay, so uh I we unloaded the ppt copy of ppt uh file in the schedule.com okay. I thank you hi julian. Thank you! Oh and it's.

B

Not to hear that yeah.

A

So well we uploaded the presentation, so you can download it in the in that page. So, thank you and thank you julian, and is there any another question or comment? Oh yeah good, to see you.

B

So there is like one one or two more minutes that we can answer your question. If you have.

B

B

So julian golden asked us what his plans going forward uh in a bank side.

B

uh We are now in a talk with the two other commercial banks who want to join this platform and we're gonna charge them with the fees of using the platform. So it'll be the probably the one of the first first case that bank are using blockchain platform to actually earning money and we went through the.

A

B

Checks that there's uh there's no problem with it, and now we are having also, we are talking with a few other institutions who want to join the platform, um but it just started so we don't. We don't know how it's going to be happen, but we will see so yeah we're just trying to enlarge the platform ecosystem for now. That's good.

A

And from uh technical side uh we will keep increasing, I mean enhancing the technology, so we call the technologies as a blockchain management technology, but we will add some more features like dynamic research allocations, so we think it would be helpful for other uh blockchain operators or some some enterprises want to use blockchain easy.

A

So that's that's our plan and we think it's times up so because it's only two minutes left. So I think if we have a general question or any comments feel free to send us an email to us and thanks again, how can I enterprise join this initiative?.

B

Could you elaborate a little more on this question? Like you mean how the other banks are joining the platform?

B

In the case um we are actually, we have an experience with with building ourselves, so the two other banks we are doing the uh doing the.

B

What what's that called that the the um we are consulting them and we are talking with their I.t sessions as well, and we are, we have the guideline documents for them to apply this blockchain system and thanks to the next lecture, um opening the pure node and deploying the blockchain is very easy, so that could be done within us and yeah. I don't think we need, like external I.t, guys to come and like uh and ethos.

A

Okay, uh you might be last comment. uh uh Somebody said I mean uh yeah, yes, yes, okay, download this ppt in the schedule.com and uh and there is an email for for both of us, so you can. If you have any question or comments, please send us uh easily. Please, and I think that's it. uh Thanks for the journey session.

B

Thanks you good email with uh questions, and it was andrew from china and.

A

Thank you so me from the samsung sds. Thank you thank.

B