The digital banking industry is beginning to explore the use of blockchain technology to enhance operational efficiency. PT Bank Raya Indonesia Tbk. (AGRO), a digital banking subsidiary of PT Bank Rakyat Indonesia (BRI), is one of the institutions assessing its potential.

Bank Raya's Director of Digital and Operations, Lukman Hakim, stated that blockchain adoption in the Indonesian banking sector is still in the exploratory stage. Several factors, including regulations, infrastructure readiness, and security considerations, are influencing this cautious approach.

"Regarding the application of blockchain in Bank Raya's operations, we are currently focused on operating using Web2 technology," Lukman said. He added that the bank continues to monitor the development of Web3 and blockchain technologies to evaluate their future applications, especially in areas that could benefit customers and improve banking service efficiency.

According to Lukman, blockchain has potential uses in digital asset recording and smart contracts for digital-based credit processes.

However, implementing blockchain comes with its own set of challenges, often referred to as the "blockchain trilemma," which involves balancing security, decentralization, and scalability. Banks must ensure their systems remain secure and efficient without sacrificing any of these elements.

Another challenge lies in the high cost of investment needed to develop a secure and reliable blockchain system, as well as the demand for specialized human resources with technical expertise.

From a regulatory perspective, Bank Raya supports the Financial Services Authority (OJK) in its supervisory role over digital financial assets through OJK Regulation No. 27/2024. Lukman expressed that the implementation of this regulation could help optimize blockchain development and minimize potential risks. Nonetheless, Bank Raya is still reviewing how these rules align with its blockchain strategy.

OJK's Chief Executive of Banking Supervision, Dian Ediana Rae, explained that blockchain adoption in banking could drive decentralized finance, allowing the public to access financial services without intermediaries like traditional banks. This shift could enhance efficiency, flexibility, transparency, and accessibility in financial products.

However, Dian also warned of the risks associated with decentralized finance, such as money laundering, terrorist financing, market instability, and consumer protection issues.

As blockchain technology continues to evolve globally, Bank Raya remains focused on assessing its potential carefully. While full-scale adoption is not yet on the horizon, the bank acknowledges the need to stay informed and prepared for future innovations in digital banking.

PHOTO: BRI

This article was created with AI assistance.