Blockchain will bring a radical rethink of banking

The blockchain is revolutionizing transaction speed and efficiency. While the technology is still in the proof-of-concept stage, it has the potential to have a positive impact on a wide range of industries and sectors, including banking, commerce, healthcare, insurance, and government.

Banking is perhaps the industry that stands to gain the most from incorporating blockchain into its business operations. Blockchain technology transforms the paper-intensive international trade finance mechanism into an electronic decentralised ledger that allows all parties involved, including banks, to access a common source of data. It also enables them to monitor all documents and verify asset ownership in real-time using a digital ledger.

Moreover, by drastically lowering transaction costs, the blockchain can save banks crores of rupees. Banks are eager to take advantage of the ability to reduce transaction costs and paper processing. Blockchain implementation will be a step toward making banks more successful and valuable.

Key Advantages of inculcating blockchain in the banking infrastructure.

Decentralization

The primary benefit of blockchain is its method of verifying and monitoring transactions — it allows individuals and businesses to process transactions without the involvement of a third party or a central bank. Several banks have started to use the technology as an alternative to systems that rely on intermediaries and third-party transaction validation. Instead of a single central authority controlling all, blockchain creates a decentralized infrastructure by sharing power to all the peers in the transaction chain.

Transparency

When data in a block is saved, it cannot be retrospectively altered — that ensures an inherently secure blockchain. It is difficult to shut down or hack since it is shared by a vast number of people, and it can be accessed by anyone using the system, ensuring accountability. Because of the decentralized design of the networks, blockchain does not have a single point of failure and can thus withstand attacks more effectively.

Cost-effective

Banks will dramatically reduce transaction fees by removing third-party intermediaries and overhead costs for exchanging assets by using the distributed ledger approach to form a mechanism that decentralizes trust. The removal of the intermediary made it possible to speed up, reliably, and less costly procedures such as cross-border payments, settlement, and trade.

Efficient

Blockchain removes the possibility of replication and bugs, making it suitable for updating a variety of digital processes. The elimination of intermediaries reduces settlement and transaction times to seconds and minutes, respectively. It also allows transactions to be processed 24 hours a day, seven days a week. Since blockchain allows banks to store data in blocks in a tamper-proof format, it allows them to increase data mobility and shorten the time it takes to complete KYC procedures.

Key takeaway

Blockchain began as the foundational technology for the virtual currency Bitcoin. It turns out that the technology has many more applications. There is a high demand for blockchain professionals and blockchain platforms, with more people turning about to blockchain councils to learn blockchain technology. It wouldn’t be too long before blockchain revolutionized the entire banking infrastructure.