Blockchain’s transparency, decentralization, and immutability make it attractive for various business sectors. The finance and banking industry has already started to explore the potential of blockchain technology. Hundreds of funds are being transferred from one region to another every day, making the global financial system among the most popular industries that could benefit from blockchain technology.
How Blockchain Tech Will Help Banks
Blockchain holds all the appealing features required of a dependable technology involved in financial transactions. It is transparent, safe, decentralized, secure and cheaper than traditional methods. Financial institutions demand many mediators to keep money safe and secure for their clients. However, the heavy reliance on human intervention makes the industry extremely expensive. It also increases the risk of fraud and errors. Blockchain technology secures transactions, makes transactions cheaper, and improves the overall customer experience with the help of decentralization and transparent network infrastructure. These features make blockchain a safe and reliable solution for the finance and banking industry.
Some banks have already started using blockchain tech. According to Mr. Jean Chalopin, chairman of Deltec International www.deltecbank.com, the bank has created a fintech division which specializes in blockchain tech implementation and research focusing on fast transactions and addressing various challenges for banks and the finance industry. “Deltec is focused on fintech banking, supported by A.I, blockchain, and deep learning,” said Mr. Chalopin.
Blockchain Tech Applications
Blockchain operates on a distributed database system, so there is no possibility of a single point of failure. All transactions are recorded in the form of blocks with a cryptographic mechanism. The blocks are linked to one other. If one block is tampered with, all the other blocks immediately show the change. Hackers will not have the opportunity to make changes in the entire system. This can help eliminate cybercrime and cyber attacks on the financial and banking sector.
Trade finance is among the most beneficial applications of blockchain tech in the banking industry. All the parties involved in a transaction can participate in a blockchain network and share information with other banks, exporters, and importers on a single common distributed ledger. When the specified conditions of the transaction are satisfied, the smart contracts will automatically implement themselves, and the involved parties can view all the actions completed. Blockchain tech can help reduce the costs associated with ticketing, overhead charges, and licensing.
Other banks can access the independent confirmation of every client by one financial organization or bank, so they do not need to duplicate the KYC (Know Your Customer) process. Updates will be shown in real time as well, which can help reduce costs and administrative efforts for compliance departments. Welcome to the future of banking!
The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.