Why Blockchains Will Transform Banking Industry?Blockchain, Crypto & CryptocurrencyUpdated on Jul 27, 2018 View more like this | Visit WOODSTOCK, NY | Contact MobileAppDaily |
Ready to implement Blockchain in your organization? That’s great! Several Blockchain app development companies are ready to help you out. But those who are still confused about what Blockchain is? And where it can be implemented? I am here to solve all your doubts. Moreover, I am also going to talk about the importance of Blockchain in Banking industry.
Blockchain is a technology, which utilizes distributed databases and cryptography, in order to record the transactions. Every new financial transaction gets copied in a sequence. It is not possible to modify or change any transaction. It offers a cryptographically safe way of performing digital assets. There is no need for third-party like banks. In short, Blockchain has the potential to fulfill these key tasks:
Increased Transparency
Track the Products Accurately
Decentralization of Transactions
Cost Reduction
All these features make it advance, offering the power to transform the organizations, along with the way we think about the transactions.
Impact of Blockchain in Banking
Global banking is presently a $3.14 trillion industry. Banks benefits intermediate payments, provide credit, and make loans. The feature of Blockchain as a disintermediated and trustless technology makes it reliable.
Fraud Reduction
Even though Blockchain is a new technology. Its capability to lessen fraud in the banking world is getting a huge attention. As per the statistics, 45% of financial intermediaries, like stock exchanges and money transfer services, are suffering from economic crime each year. Most financial systems around the world are designed on a centralized database. These systems are vulnerable to cyber attacks due to its one point of failure. As soon as a hacker cracks the system, they have the full access to it. The Blockchain is importantly a distributed ledger where every block consists of a timestamp. Moreover, each block is connected to one another, resulting in an immutable chain. This technology is capable to eradicate a number of existing crimes in our financial institutions or banks.
Know Your Customer (KYC)
According to a Thomson Reuters Survey, financial institutions spend approximately $60 million to $500 million per year, in order to keep up with KYC. These regulations are necessary to lessen money terrorism activities and money laundering. Because in the process of KYC the complete verification of the client is done. If it is done manually, the process is lengthy and time-consuming. Blockchain allows the independent verification of a user by a single company to be accessed by other company. Hence, there would be no need to do the KYC procedure once again.
Smart Contracts
As a matter of fact, Blockchain can save any kind of digital information, such as computer code, it enables us to have smart contracts. These contracts could be designed to build contracts or perform financial transactions. It is possible when a specific set of criteria has been accomplished.
Payments
Talking about the payment process, Blockchain can do a lot to make it effortless. It would allow for lower costs and higher security for financial institutions to do payments between companies and their clients. In fact, for the payments that can be done between the banks themselves. Currently, there are many intermediaries in the payment processing system. However, Blockchain would vanish the requirement for any of them.
As I Come to the End
No doubt, Blockchain provide a lot of incredible opportunities for the financial and banking service industries. Nevertheless, there are few hurdles we require to overcome before we go ahead. Blockchain would need to comply with the privacy laws of the present and the future. It needs to ensure the security of the data. Also, any Blockchain that would be used in this sector has to handle a large set of data. Hence, scalability is extremely crucial.
Blockchain is a technology, which utilizes distributed databases and cryptography, in order to record the transactions. Every new financial transaction gets copied in a sequence. It is not possible to modify or change any transaction. It offers a cryptographically safe way of performing digital assets. There is no need for third-party like banks. In short, Blockchain has the potential to fulfill these key tasks:
Increased Transparency
Track the Products Accurately
Decentralization of Transactions
Cost Reduction
All these features make it advance, offering the power to transform the organizations, along with the way we think about the transactions.
Impact of Blockchain in Banking
Global banking is presently a $3.14 trillion industry. Banks benefits intermediate payments, provide credit, and make loans. The feature of Blockchain as a disintermediated and trustless technology makes it reliable.
Fraud Reduction
Even though Blockchain is a new technology. Its capability to lessen fraud in the banking world is getting a huge attention. As per the statistics, 45% of financial intermediaries, like stock exchanges and money transfer services, are suffering from economic crime each year. Most financial systems around the world are designed on a centralized database. These systems are vulnerable to cyber attacks due to its one point of failure. As soon as a hacker cracks the system, they have the full access to it. The Blockchain is importantly a distributed ledger where every block consists of a timestamp. Moreover, each block is connected to one another, resulting in an immutable chain. This technology is capable to eradicate a number of existing crimes in our financial institutions or banks.
Know Your Customer (KYC)
According to a Thomson Reuters Survey, financial institutions spend approximately $60 million to $500 million per year, in order to keep up with KYC. These regulations are necessary to lessen money terrorism activities and money laundering. Because in the process of KYC the complete verification of the client is done. If it is done manually, the process is lengthy and time-consuming. Blockchain allows the independent verification of a user by a single company to be accessed by other company. Hence, there would be no need to do the KYC procedure once again.
Smart Contracts
As a matter of fact, Blockchain can save any kind of digital information, such as computer code, it enables us to have smart contracts. These contracts could be designed to build contracts or perform financial transactions. It is possible when a specific set of criteria has been accomplished.
Payments
Talking about the payment process, Blockchain can do a lot to make it effortless. It would allow for lower costs and higher security for financial institutions to do payments between companies and their clients. In fact, for the payments that can be done between the banks themselves. Currently, there are many intermediaries in the payment processing system. However, Blockchain would vanish the requirement for any of them.
As I Come to the End
No doubt, Blockchain provide a lot of incredible opportunities for the financial and banking service industries. Nevertheless, there are few hurdles we require to overcome before we go ahead. Blockchain would need to comply with the privacy laws of the present and the future. It needs to ensure the security of the data. Also, any Blockchain that would be used in this sector has to handle a large set of data. Hence, scalability is extremely crucial.
