As an emerging technology,
Blockchain still has an uncertain future. Predictions are still both positive
and negative about its potential.
Blockchain is a digital,
transactional ledger. It maintains identical copies of the same ledger across a
series of computers within the same network. Blockchain can help deliver
increased security, enhanced data recording, and faster processing to transform
the future of finance.
Blockchain works on a distributed
ledger model that records every transaction and maintains the chronology and
authenticity of that information on a secure global network designed to be
tamper-proof. The technology allows transacting parties to interact seamlessly,
eliminating recordkeeping activities across procure-to-pay, order-to-cash, and
record-to-report processes.
With this promise, blockchain has
started to catch the imagination of finance and accounting executives with the
possibility of transforming finance and accounting (F&A) operations similar
to the ways the internet revolutionized knowledge sharing and collaboration.
·
Increased efficiency from transparent
records and a single source of truth
·
Enhanced data integrity to reduce loss
·
Improved customer experience through faster
processing
· Higher availability of capital and lower cost of business
Part
of a new future for finance
Blockchain
clearly will have significant impacts on the finance function and most
organizations will gradually adopt the technology as they envision a new
operating model for finance. We anticipate the following key trends:
·
Blockchains will connect to existing
financial systems
·
Blockchains will be a hybrid of private
and public ledgers
· The regulatory environment will remain in flux
What are the Blockchain Use Cases in Financial Services?
1. Capital
Markets
·
Issuance
·
Sales and trading
·
Clearing and settlement
·
Post-trade services and infrastructure
·
Asset servicing
·
Custody
2. Asset
Management
·
Fund launch
·
Cap table management
·
Transfer agency in asset management
·
Fund administration
3. Payments
and remittances
·
Domestic retail payments
·
Domestic wholesale and securities
settlement
·
Cross border payments
·
Tokenized fiat, stablecoins, and
cryptocurrency
4. Banking
and Lending
·
Credit prediction and credit scoring
·
Loan syndication, underwriting, and
disbursement
·
Asset collateralization
5. Trade
Finance
·
Letters of credit and bill of lading
·
Financing structures
6. Insurance
·
Claims processing and disbursement
·
Parametrized contracts
· Reinsurance markets
Such game-changing blockchain applications based on proven technology are considered highly likely. But the timing of adoption is by nature always speculative.
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