We keep hearing that blockchain can revolutionize the banking industry.
We keep hearing that blockchain can revolutionize the banking industry. Now, in this article, it’s time to find out if that is a true statement or not.
Given that blockchain technology first found its firm footing with cryptocurrency Bitcoin, it is no wonder that it continues to play a major role in the world of currencies today.
Only now, the role has expanded to fiat currencies from cryptocurrencies as well. Naturally, more and more banks are falling back on this incredible technology to make their transactions more efficient, smooth and fast.
How Can Blockchain Be Used In Banking?
Blockchain Technology is often used to replace the SWIFT money transfer system of the banking industry. Given that blockchain ensures a decentralized platform for facilitating speedy, low-cost transactions, blockchain can be an excellent way to make cross-border payments more efficient.
Banks around the world are increasingly using Ripple, as a prime example of that application.
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Client identification also becomes a breeze with blockchain. As you have a single distributed ledger where information can easily be stored from many stages of the process, it becomes more convenient to bring together all client data at one place. As banks mostly have to complete the KYC (know your customer) verification quite diligently, blockchain can prove to be a huge aid.
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Blockchain smart contracts can play a revolutionary role in handling loans and disbursements.
By acting as per pre-set conditions or criteria, and controlling the disbursements of funds accordingly, smart contracts can eliminate middlemen from the system and thereby help cut costs as well chances of human error.
In a blockchain ledger, payments can be easily and effectively added, with all stakeholders having access to viewing what information is being fed into the system regarding the transactions that have taken place.
Clearly, the banking industry has much to thank blockchain for. In the words of Gautam Jain, Global Head of Digitisation and Client Access, Standard Chartered Bank:
“Banks should be taking a lead in this because if you look at the original purpose of setting up a bank, it was to connect communities together and facilitate trade and commerce. For the first time, you have a tool to do just that on a global scale which is secure and irrefutable.”
Jain’s is just one of the voices telling us about the immense role blockchain can play in revolutionising the banking industry. Clearly, blockchain is poised to influence the banking industry substantially.
In fact, it is likely to prove itself as the most disruptive element in the banking sector in decades. By cutting costs, hastening transactions, reducing fraud, bolstering security and boosting overall efficiency, blockchain can definitely revolutionise the banking sector.
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