Skip to main content

How Blockchain Is Changing Banking and Financial Services

Given nowadays complex macroeconomic environment, as well as regulatory and investors’ pressures, banks are forced to seek new ways of lowering costs and increasing profitability. In such a setting, technological innovations such as blockchain could become a lifeboat for banks.

Similar to many innovative technologies blockchain has been accepted by banks, entrepreneurs, technologists, scholars, regulatory authorities, and many more with quite a portion of enthusiasm. Multiple analysts predict positive developments as a consequence of blockchain adoption, such as new revenue models, efficiency gains, cut of millions in costs, and significant lowering of risks industry-wide.


Increasing interest in Blockchain within the financial services industry 

The interest in Blockchain continues to rise exponentially, especially within the financial services industry: Re-establishing the concept of trust, blockchain enables direct P2P transactions. Unlike traditional transactions, which heavily rely on central counterparties (i.e. banks) for clearing and storing information, blockchain transactions are managed by a network of nodes – which translates into quicker settlement times, fewer redundant intermediaries, and ultimately fewer costs. Cryptocurrencies hold the promise of a new native digital asset class without a central authority.

With emerging use cases with each passing day, blockchain technology has proved to be a game-changer with its potential to break more boundaries in the future.

Let’s have a look at how blockchain has impacted financial services and the financial sector as a whole.



FRAUD REDUCTION

As the involvement of money in any situation leads to increased chances of fraudulent activities, blockchain technology has the high potential of eliminating the occurrence of such activities in financial transactions. A centralized database system is vulnerable and highly prone to cyber-attacks but the blockchain is based on a decentralized system and as a result, it is tough for a blockchain system to undergo cyber-attacks.

Since each transaction is stored in the form of a block with a cryptographic mechanism in the blockchain, there is no chance of failure and corruption. Moreover, all the blocks are linked to each other which helps to track the breach and provides the hacker with no time to make changes in the overall system. The process will be simplified with the secure Blockchain system in place.

KNOW YOUR CUSTOMER (KYC)

One of the critical policies that all banks and financial institutions are strictly concerned about is the Know-Your-Customer Regulation. Under KYC regulation, banks and other financial institutions identify their customers to minimize financial crimes and money laundering activities.

With blockchain technology widely adopted, the independent verification of each client by one bank or financial organization would be accessible for other banks to use so that the KYC process doesn’t have to be restarted again.

This process saves financial institutions a lot of money and reduces administrative efforts.

MORE ACCESSIBLE AND FASTER INTERNATIONAL PAYMENTS

Blockchain technology solves a lot of problems faced by banks and financial sectors these days regularly. Several banks have enabled the movement of money through the use of Blockchain technology. Start-ups have also been established to collaborate with banks so that banks can execute international payments through blockchain.

Blockchain promises a wide range of benefits, one of which is a better and secure way to connect and transact with each other without having to deal with zero transparency and unfair barriers that individuals face with traditional methods.

SMART CONTRACTS

The application of smart contracts can prove particularly important in the banking and finance sector as it allows the automatic execution of commercial transactions and agreements. Smart contracts, when used for financial transactions, would have more security than traditional contracts, and since there are no middlemen, transactions costs get reduced to the bare minimum. This will ensure the transaction will be approved only if all the written conditions of the code are met, also the chances of error at the time of execution are dropped drastically.

CLEARING AND SETTLEMENT      
The global cash settlement for fixed income, equity, and derivative products in various currencies is slow, costly, and complicated. Because of the large number of parties involved, it takes several days to settle. By eliminating a large number of intermediaries, blockchain enables instantaneous settlement leading to substantially lower costs.

Future banking eco-system

The future banking ecosystem will look very different from now. Triggered by blockchain technology and its disruptive character, this ecosystem will be one of open innovation, collaboration, bank-Fintech partnerships, and increased competition. While there will be a much lesser need for middlemen, there will be a growing need to cooperate between banks and other parties in order to get the most advantage from this and new technologies. On the other hand, there will be more intense competition from newcomers.  

Have More Questions!!             

Email at: - sales@blockchaindevelopments.io

Connect with expert team: - https://bit.ly/2B32Az7

Comments

Popular posts from this blog

Smart Contract Development Company in Washington

Smart Contracts are now essential to any blockchain-based business. The self-executing digital contract is the key to automate processes, transactions, and agreements, helping to reduce costs, hence security and end the very confusing and not reliable paperwork. Smart contracts are automated digital contracts that enable highly-secure and self-executing agreements to be formulated. They solve many issues faced in traditional contracts such as lengthy paperwork, the need for third-party intervention, and huge costs. Codezeros is the Smart Contract Development Company with the best solutions for your enterprise. Up to date with every new technology and innovation in the blockchain world. Our team of experts is focused on building an outstanding computer-based protocol. Customizable for any type of industry, the digital contract doesn’t need a middleman to ensure that all the parties involved are performing their part. Once all the rules and conditions are settled, its base algor...

Top blockchain App Development Company in Toronto

Nowadays, it’s quite a challenging job to find-out the best company that provides blockchain application development services. There are lots of companies in the market that offers blockchain solutions and are trying to take a first place in this field. Codezeros is a leading Blockchain app development company with high potential for perfection and innovation. To create Blockchain apps that revamps user experience has been our vision since inception.       Codezeros is a Top  blockchain App Development Company in Toronto  that has a highly dedicated team of expert developers who can craft apps perfectly according to your requirements. They provide customized blockchain app development solutions based on the client requirements and also deliver blockchain technology related other services with high quality at an effective cost. We develop next generation of Blockchain Apps for our customers using Ethereum & Hedera Hashgraph and many mor...

Security Token Offering Services(STO) | Codezeros

Stay at the top of growth wave with quality token development. Security tokens are just a more flexible version of regular securities, only more efficient. They are cryptographic tokens that pay interest and dividends or share profits to token holders based on an asset like shares, real estate, or bonds. Some of the major benefits of opting for STO development are as follows: Traded as securities Credibility Low Fees Decentralized assets remain decentralized An enterprise or a startup will sell its digital asset- its cryptocurrency, to its investors and whosoever, supports the project financially. This sale of their cryptocurrency or a fraction of it will happen in a pre-decided currency form of USD, Euros, or a cryptocurrency like bitcoin. This process will be followed by whitepaper creation and a pitch deck. Later on, after Tokenomics of the cryptocurrency and smart contracts, a pre-STO landing page is created. This process comprises of STO solutions that we provide. We...