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The First Meeting of FinTech Forum

January 2017
FinTech Center
Payment and Settlement Systems Department
Bank of Japan

Theme

FinTech and Information Security

Date

August 23, 2016

Executive Summary

The Bank of Japan held the first Meeting of the FinTech Forum on August 23, 2016.
At the Forum there were informative presentations and lively discussions about the security assessment of the biometric authentication system, and the security of blockchain technology.

(1) Security Assessment of Biometric Authentication

In order to mitigate the risk of so-called "spoofing" by artifacts, the participants shared the technical idea of combining multiple authentication systems on the smartphone with variety of sensors. Initiatives to register and verify information with encryption technologies in order to prevent leakage of biological information were explained. As for security aspects, the participants shared the understanding that, because of an absence of standardization for measures and methods, it is somewhat difficult to make comparative assessment of various biometric authentication systems or assess the vulnerability of them. The participants also shared the fact that some relevant entities are currently seeking for international standardization of biometric authentication in order to overcome the difficulties mentioned above.

(2) Security of the Blockchain Technology

The participants shared 1) challenges to ensure security, 2) a technology of utilizing a number of secret keys to avoid economic losses in the case of the loss of a key, and 3) initiatives to leverage blockchain technology for trade finance and the supply-chain management. One participant introduced the idea of using blockchain technology to register the up-to-date information on the contract contents and settlement situation in securities settlements so as that all the relevant entities could always share the necessary information. Those initiatives evidenced the potential of blockchain technology to be used as a tool for communication and information sharing.

The participants also shared the view that, in order to deploy the blockchain technology, many challenges still remained, and that those challenges should be dealt with in a quick and efficient manner. Moreover, many participants expressed the view that, in spite of the fact that information sharing within the community was the premise for blockchain technology, it is essential that confidentiality and data privacy be ensured particularly in the use for financial services. In addition, The DAO incident* demonstrated the possibility that the way to resolve a dispute could affect the credibility of the public blockchain system as a whole.

  • The Decentralized Autonomous Organization (DAO) is a digital fund established within the network of the Ethereum, which is one of the blockchain platforms. In June 2016, an attacker hacked the bug of the platform and illegally cheated it of a sum equivalent to about 50 million USD. A hard fork was made as the countermeasure to this incident. However, some members opposed this treatment, and it became clear that the decentralized framework faces big challenges in terms of governance for taking concerted actions in cases of unexpected events.

Program

Opening Remarks

Information Technology and Financial Services: The Central Bank's Perspective
Haruhiko Kuroda, Governor of the Bank of Japan

Presentations

(1) Future and Challenges of Biometric Authentication in FinTech

Security Assessment and International Standardization of Biometric Authentication
Masashi Une, Director, Center for Information Technology Studies, Institute for Monetary and Economic Studies, Bank of Japan

Biometric Authentication and Security in FinTech
Takeshi Sato, Director, Business Development, Liquid Japan Co. Ltd.

Biometric Authentication -- Asset Protection in FinTech
Shizuo Sakamoto, Technology General Manager, Second Government and Public Solutions Division, NEC Corporation

(2) Use Case and Security Measures of Blockchain Technology for Financial Services

Credibility and Security of Blockchain Technology
Hiroshi Shimo, CEO, Consensus Base Inc.

Use of Identifier and Management of Cryptographic Key for Blockchain Technology
Kenji Saito, Senior Researcher, Keio Research Institute at SFC, Keio University/ Orb, Inc.

Use Case and Security Measures of Blockchain Technology for Financial Services
Yasunori Sugii, CEO, CurrencyPort Limited

Challenges and Measures for Introduction of Blockchain Technology
Yoshiharu Akahane, Senior Manager, Systems Planning Group, Technology Strategy Promotion Section, Business Strategy Department, Financial Segment, NTT DATA Corporation

Security and Future of Hyperledger Project
Ryu Takaki, Associate Partner, Global Business Service, FSS Transformation, IBM Japan, Ltd.

Demonstration and Security Measures in Securities Post Trades
Tomoko Kawano, Senior Vice President, Custody Sales & Marketing Team, Settlement & Clearing Services Department, Mizuho Bank, Ltd.

Inquiries

FinTech Center, Payment and Settlement Systems Department

E-mail : post.fintech@boj.or.jp