Nibedita ChandaMay 30, 2019
The economic stability of any country is significantly dependent on its banking sector. Today, finance and banking is driven by technology and the sector has witnessed multiple disruptions in recent decades. Traditional banks claiming a stronghold on national economy are being replaced by 'neobanks' that use most up-to-date technology with a better claim to customer data security, carving its path to change the banking sector dramatically.
Technologies application program interfaces (APIs), artificial intelligence (AI), and robotic process automation (RPA) are the new additions to the banking systems, which are changing its face. Disruptive technologies such as Blockchain has revolutionized the way the world is likely to look at banking and finance in the coming years. Blockchain is a technique of encrypting every type of transaction that helps in protecting the integrity and identity of all parties involved in the process. It is the latest solution for solving problems by reshaping the current infrastructure. The best part of blockchain is that it is no longer limited to cryptocurrencies such as Bitcoin, as it is a single version of the truth of each transaction. Thus companies such as Accenture are in favor of implementing blockchain, as according to them the world banking sector could save up to $20 billion by 2022 through it.
After cryptocurrencies and Initial Coin Offerings (ICO) have been received very positively, the world is curious to know more about this promising technology and its influence in shaping the future of banking sector.
● Blockchain is one of the safest ways for data storage and transmutation. It supports a decentralized and transparent network infrastructure that reduces the costs significantly involved in the process otherwise. These significant attributes make blockchain a very promising solution even in an industries which are as restricted as the banking sector.
● Banks and financial sectors can use blockchain technology to increase speed for bank-to-bank and international transfers. The financial analysts and large financial companies are in favor as they believe that this technology is very likely to replace the bank transfer system in the near future.
● Blockchain technology helps in the decentralizing of the client identification system. This is a perfect solution for the credit organizations that perform Know Your Client (KYC) before any transaction processing. It supports single identification creating data to be stored in a secure location for all the banks to access it.
● There is an upfront relationship between the banking and financial services, which becomes responsible for insuring deposits and loans. The banking system has however been proven to be unreliable and vulnerable for most of the developed countries. The state-economy-decision-makers are prone to ensure the private bank deposits. The distributed system of loans and other money transfers are based on technological support of blockchain, which is not only in favor of decentralization but also to immune bankruptcy possibilities since one specific organization does not control all the deposits.
● Traditional insurance can also be enhanced significantly by automating payment on insurance cases. Blockchain is a distributed registered system that encourages the transactions to be verified and approved by all participants in the exchange before it gets included in the chain.
● Blockchain is a computer network that is decentralized and thus there is no one central computer system that can be hacked or corrupted making the system more secure and trustworthy.
The blockchain technology is set to improve and streamline banking operations, reshape market structures, and enhance customer experience with a more trustworthy exchange of goods, real assets, services at a much lower cost. In a nutshell, blockchain is the most realistic solution to make baking safer.