Blockchain technology has been a hot topic for many years. It’s not surprising, considering how it is changing the dynamics of many industries. Blockchain technology will revolutionize the way we do business. This is not just for the banking sector but also across other sectors like healthcare and retail.
A blockchain is, in essence, a distributed ledger or public database that is shared openly among disparate users. It also creates an unchangeable record for their transactions. These transactions are cryptographically protected to make sure they remain tamper-proof.
Blockchain holds great potential to transform the banking industry and make it more efficient, transparent, secure, and cost-effective.
These are just some of the many ways that blockchain technology can change the future banking system.
1) International Transfers Can Be Expedited
Blockchain can make international payments and monetary transactions more efficient, transparent, and secure. Transferring money from one country to another can take several days and involve multiple third parties.
Each party takes a share of the transaction. The sender could lose a lot of money when the money arrives at its destination. Blockchain technology allows for faster peer-to-peer transactions, which are more efficient for consumers and international businesses.
Blockchain is a digital ledger that keeps an unalterable record of all transactions between two parties. Computers validate each transaction on a network before it is added to the blockchain. Once completed, they cannot be altered or altered.
2) By Increasing Security & Reducing the Fraud
Blockchain is a great way to eradicate fraud because it provides a transparent audit trail. Because it has multiple redundancies, making it almost impossible to change any information once it is uploaded to this network.
Thousands of computers maintain the Blockchain network. This means hackers cannot attack it and alter data without evidence. This makes blockchain highly relevant in today’s global cybercrime and widespread ransomware attacks. These attacks can compromise sensitive information, causing the loss of hundreds of thousands of dollars for victims.
3) Reduce costs for customers and banks
Blockchain can significantly lower the cost of banking services while enhancing the quality of products.
Financial institutions are currently looking at ways to use this technology to reduce costs and speed up their operations. Blockchain can automate some tasks. Blockchain is a distributed database that is secure, transparent, and easy to implement. These characteristics allow you to automate specific banking processes (e.g., issuing loans or payments).
4) By Reducing Human Error
Numerous reports have shown that fraud is often caused by human error in accounting, record-keeping, and reconciliation. It is also common for security operations to result from human errors or negligence. This can lead to massive cyber security problems.
Blockchain is an automated system that records transactions and cannot be modified later. This technology will eliminate many manual processes, reduce human error, improve efficiency, and mitigate the effects of cyber threats.
5) Lenders and Borrowers can make lending easier
Lending is an essential part of banking. Both corporate and retail customers need to have liquidity. They also need to be able to pay their cash bills. Lending is another revenue driver for banks. Banks must do this correctly.
As transactions are settled instantly, lending will become easier with blockchain technology. This will help avoid double-spending and defaulting.
6) Potentially eliminating intermediaries & commissions
Blockchain allows people to trade directly between themselves using a record kept in a shared ledger. This eliminates middlemen such as banks and stock exchanges.
Share prices may suffer if banks are removed from the loop. However, it’s not as clear-cut for stock exchanges, which provide vital services for trading shares.
While they may still be able to provide liquidity and security for blockchain-based financial services, the days of broker fees being paid are over with the advent of blockchain technology.
7) Multiple Use Cases
Blockchain can be used to vote or for business contracts. Blockchain is a record system without a centralized authority. This makes it virtually impossible to hack into or alter.
Information stored in a blockchain system can be shared among many computers. The data cannot be altered unless all computers on the network agree to it.
The banking and financial services industries are slowly but surely embracing blockchain technology. It can also transform the security of the banking industry. Blockchain technology has the potential to transform international payments and security, ranging from remittances to securities trade to cross-border payments.
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