Kasikornbank (KBank) is adding more participants to its blockchain-based letter of guarantee (L/G) system after the service received a positive response from clients.
Companies and other banks are joining the bank's blockchain L/G system, which is still in the Bank of Thailand's regulatory sandbox.
The addition of more participants and service features will probably require the system to spend more time in the regulatory sandbox to affirm its efficiency and security, said Silawat Santivisat, KBank's executive vice-president heading the corporate and SME products division.
The four original participants in the system were the Metropolitan Electricity Authority, the Provincial Electricity Authority, PTT Global Chemical Plc and PTT Polymer Marketing Co Ltd.
About 10 participants are looking to upgrade their L/G management through blockchain.
Blockchain is expected to improve cost management and shorten the processing time of financial services, Mr Silawat said.
"Under traditional L/G service, it takes about nine days to complete the process," he said. "In the blockchain L/G system, it takes only half a day to complete a comprehensive procedure. Blockchain can save both time and costs, significantly."
KBank, the country's fourth-largest lender by total assets, is the first bank in the world to introduce blockchain L/G services in collaboration with IBM Thailand, according to Mr Silawat.
The bank received approval from the central bank in July to enter the regulatory sandbox.
The size of the L/G market in Thailand was 1.2 trillion baht last year and is forecast to rise by 8% to 1.3 trillion by the end of this year.
KBank controls a 20% share of this market. Aided by its L/G system, the bank aims to increase its market share to 35% by 2018.
Mr Silawat said the bank is considering integrating blockchain into other financial services, which would allow it to build up a better ecosystem.
The technology is expected to strengthen the business efficiency of commercial customers and the country as a whole. The Bank of Thailand is prodding banks to adopt innovative financial services in areas that will strengthen the country's digital ecosystem.
Siam Commercial Bank (SCB), the country's third-largest bank, has also tested its blockchain technology in the cross-border remittance sector using the Bank of Thailand's regulatory sandbox.
SCB, in collaboration with Japan's SBI Remit, is using Ripple's blockchain enterprise solution to power real-time remittance payments between Japan and Thailand.
A first in Asia, Ripple's cross-border payments network is helping remittances from Japan reach SCB retail customers faster and more easily than before.
