Japan-based bank Mizuho Financial Group and IBM together have announced on Thursday their plans to test blockchain technology and its potential for use in settlements of virtual currency.

According to the press release, Mizuho will be exploring how payments can be instantly swapped which will potentially lead to new financial services based on blockchain technology.

"Mizuho Financial Group has a history of adopting new technologies to continuously improve customer services," Masahiko Katou, Senior Technical Officer at Mizuho Financial Group said. "In an era of technology transformation, Mizuho is testing blockchain, Watson, and other technologies to deliver high quality and more efficient customer services," he added.

The pilot project will use the open source code IBM, contributed to the Hyperledger Project which is a collaborative effort created to advance blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledgers.

According to IBM's summary of the news provided by coindesk.com, by putting blockchain through a number of rigorous tests, the bank is gaining confidence in its use and sharing their learning with the financial community. With the virtual currency pilot, the bank expects to better understand how the settlement process can be simplified in a private, secure and permissioned blockchain network.

Mizuho is working with IBM Bluemix Garage which is newly-opened in Tokyo that provides IBM Blockchain services. IBM is helping Mizuho bank to transform the design and development of business applications using blockchain technology, based on various industries’ global insights and the experience of system development at Mizuho FG.

"IBM understands how to use blockchain and IBM Cloud as the technology foundation to transform the way businesses interact with their ecosystem of trading partners. IBM is proud to continue its support to Mizuho Financial Group's important initiatives." Masao Sanbe, MD of Industry Sales at IBM Japan said.

IBM is helping to remove complexity and making the distributed ledger more accessible and open with the help of open source contributions and resources for blockchain software developers. Potential areas that are ready for a change using blockchain technology includes supply chains, financial services, IoT, risk management, digital rights management and healthcare among others.