Blockchain is the next big thing in the financial sector, while we’ve heard enough stories stating technology can be immensely benefitting to the financial sector, Blockchain is our top tech! a technology which isn’t just a form of the distributed ledger but also has the potential to transform the costing parameters, boost the process execution and improve transparency is surely worth the integrating.
So, what is basically blockchain doing? Let’s delve deeper! Blockchain is a safe, highly transparent, and future technology that can save huge in the long run. It has the potential to displace all business activity built on transactions occurring on the traditional databases. Any technology or process having low transparency and limited traceability is more likely to be disrupted by the blockchain applications which can probably bring an amazing change and greater management possibilities for the financial sectors.
Benefits of Integrating Blockchain
Its distributes consensus-based architecture eliminates failure and reduces the requirement of data intermediaries including transfer agents, messaging systems operators, etc. The network also allows you to keep your data completely secured against any fraud or hack as the data entered cannot be tampered with or edited in any way possible. The feature of security makes it impossible to hack or manipulate the data making blockchain an undoubted choice, especially for the financial industry.
Changes done in the data or any addition in the process is visible to the set of shared individuals in the network. Acting as a single shared source of authenticity for network participants, blockchain is a transparent network letting the entire transactional process be simpler and smoother.
- Smart Contracts
Ever felt stressed over-involvement of mediators for any deals or transactions? Well, blockchain can help you in the process! Blockchain-based smart contracts are tamper-proof, deterministic software automating the business by creating trust and efficiency amongst the two parties, eliminating the requirement of middlemen.
By providing market-leading tools for data privacy across every single layer of the process, the technology allows selective sharing of data in business networks. This substantially improves transparency, trust, and reliability while maintaining privacy and confidentiality.
Blockchains can be public and private both and when it comes to working on both side by side, you might have doubts! Blockchain supports interoperability between both the chains, offering each enterprise solution a global reach, excellent resilience, and high integrity.
What makes Blockchain a Disruptive Technology for Banks?
Banking Industry needs technology to revolutionize the way banks nowadays doing business. Blockchain here is the most required ingredient in letting the financial industry work smoothly on operations and control the functioning of the involved processes. Here are a few reasons why Financial Industries really need Blockchain in power!
- Decentralized Network
Blockchain operates on a decentralized network based on a peer-peer structure. It handles entire operations exactly the ones like a bank but without a central authority monitoring the data flow. So, it cuts the need for a mediator, providing control to the owner of the assets. All the information is then stored in the network in the form of blocks, these blocks are interconnected & linked to each other providing all the details of the current and past transactions. The data is stored permanently and cannot be tampered with further, any changes if done will be recorded in a separate block.
- Distributed Ledger
The Property of distributed ledger allows quick sharing of anything going on in the ledger including the virtual shifts of value between multiple parties. Blockchain is extremely beneficial due to its unique ability to automate trust and transparency among the parties using the same. As the ledger is distributed among all the involved participants, it coexists in multiple places. Every computer in the distributed network avails a copy of the ledger ensuring complete transparency and preventing any failures, impossible to be tampered any point of time.
- Data Immutability
The best property of blockchain is its immutability. A blockchain network once designed and implemented cannot be edited or altered, the data is stored as blocks and remains unchanged for ever until you wish to make changes in the subsequent blocks. While these kinds of changes do require the consensus of the network majority. This makes data secure and trustable!
Where should blockchain be at power for the banking industry?
These disruptive properties are only at use once you implement them at the right place! though it is the potential to be at power at every financial system, majorly disruptive use cases can be found in the following activities –
- Cross Border Payments
Usually, payments done cross border are time taking and quite an expensive process to be afforded as multiple banks and intermediaries are involved in the same. Blockchain offers an easy and secure solution as there are no third parties involved as an authorization, it simultaneously cuts out many traditional mediators, the expensive processes of cross border payments is then simplified.
- Share Trading
Many fintech app development companies are claiming on using blockchain for buying and selling stocks and shares, which brings numerous benefits. As the traditional and currently followed process involves third parties such as brokers, CCPs, and exchanges making the process highly time-consuming. The decentralization of blockchain technology can eliminate all the middles and enable trading to be operational on computers all over the globe. Trading transactions through blockchain also reduces the loss of information and thus improves the performance at a greater level.
- Digital Identity Verification
Online transactions require high security and necessary steps to be taken, this includes face-to-face authentication, identity verification, etc. All the mentioned steps are required to be repeated for every new service provider. With the help of blockchain, a user can re-use their already registered identity and make sure that he does not need to repeat the verification again and again (only if the service providers are also connected with a blockchain network). The disruption has just begun, there’s a lot more in the row! Willing to have a blockchain-powered network for your financial institution? Find the best blockchain development company and get started!