Big-four bank FNB is considering leveraging blockchain technology to digitise its customers’ title deeds.
This was revealed by CEO Jacques Celliers, in a wide-ranging interview last week after FNB announced its financial results for the year ended 30 June.
While Celliers is pondering the opportunities presented by blockchain technology, he said the bank is still not open to crypto-currencies.
In November 2019, FNB announced it was closing crypto-related bank accounts, much to the anger of local digital currency players. The bank notified the crypto-currency exchanges it will close their accounts in 2020, citing the risks the digital currencies present.
Following FNB’s announcement, other big banks in the country followed suit in snubbing crypto-linked accounts.
However, last year, the South African Reserve Bank’s Prudential Authority issued a guidance notice to the big banks to start working with crypto players.
Celliers sees blockchain as an innovative technology that can be harnessed to smoothen the process of obtaining title deeds.
According to Fortune Business Insights, the global blockchain technology market was valued at $11.14 billion in 2022, and is projected to grow from $17.57 billion in 2023, to $469.49 billion by 2030.
Said Celliers: “There is a technology called blockchain, the architecture below crypto. We are leveraging that technology. Many of our customers do not have title deeds to their properties; so, we are trying to find a way to help our customers get e-titles.
“We are also playing with lots of innovations within the trade space to see if there is a better way of leveraging the technology.”
The implication of using blockchain technology is that the ownership of each property record will be managed in its own ledger, as opposed to being updated in a paper-based title deed.
Business Law Digest notes that using blockchain’s digital ledger technology, verification and transfer of real estate titles could be more efficient and reliable.
It adds that in a perfectly implemented blockchain-based land management system, or “blocktitle” system, the title is verified, transferred and recorded on the blockchain.
In his State of the Nation Address earlier this year, president Cyril Ramaphosa said South Africa’s backlog in processing title deeds is currently over a million houses, which amounts to an estimated R242 billion in assets that should be in the hands of South Africa’s poorest households.
“We will focus not just on eradicating this backlog, but on making the title deed system more effective and more accessible,” Ramaphosa said.
Regarding crypto-currencies, Celliers noted FNB is waiting for the technology to fully mature before making its play.
“On crypto assets, we are not participating in any of that at this stage,” he said. “From an investment perspective, we need to cater for all asset classes; so, as soon as that asset class reaches a certain level of maturity, we will obviously participate in that opportunity.”