How Blockchain Technology helps in Rebuilding the Banking Sectors ?
Blockchain technology is creating hype from the day of its invention and it has gained a lot more attention in recent years . Because of its transparency and flexibity nature, blockchain is being adopted in many industries for its growth and development. Then how Banking sector will alone be in an exception ?
There are thousands and thousands of transactions and funds across various regions , which shows that the Banking sector is also one which is predominantly used by the people. This increases the challenges in Banking and use of blockchain can resolve some of its challenges.
Now , let us discuss about the impacts of blockchain in banking sectors and how blockchain helps to rebuild the present banking sector.
Major Challenges in Banking Markets
The major challenges that banking sector faces in recent days involves the following :
1 . Continous Monitoring
As the world is becoming digital , every transactions and payments are becoming digitalized and this increases the responsibities of banking sectors to monitor and record details periodically .
2 . Time Delay
The involvement of third parties while transactions can take 2 to 3 days or a week to complete the payment process . This time taken to process each single transaction is too long and results user in dissatisfaction .
3 . Payment Costs
The involvement of third parties and long duration for transactions , results in high costs for each and every transactions . This payment costs are enormous and this creates challenging situation for Banking sectors to engage its users.
4 . Diffculty in Managing Records
Day by day the users of Banking Sector increases on a huge rate and maintaining the complete ledger for storing all the transaction records is becoming a complex task . This inturn increases the payment process time .
There are lot more issues prevailing in banking and they uses many technologies to overcome all these issues . Blockchain is one among them which helps in recreating the banking sectors with fast payment process.
Blockchain in Banking Sectors
In the list of industries that uses blockchain , Banking sectors stands first in the list . 30 % of current Banking sectors uses blockchain technology to create a revolution in Banking .
Banking sectors performs many steps to keep the payments secure and safe which requires a more mediators. The process of involvement of more middlemen increases expensive of banking sectors.Inturns involvement of many people will create a chance for errors and frauds. The use of blockchain in banking eliminates the use of middle men and provides secured transactions with low costs .
Blockchain provides high level of security for exchanging data and money.Blockchain is safe, secure, decentralized, transparent as well as low-cost .The use of blockchain in banking , has the potential to solve a lot of problems.
Benefits of using Blockchain in Banking
The blockchain helps banking sector to overcome issues in costs and security . Now let us look at the benefits of using blockchain in banking sectors .
1 . Reduction of Fraudulence/errors
The use of blockchain in banking sector restricts the presence of middle men and this results in reduction of fraudulence activites and errors that occurs when there is lot of manual activities involved.
2 . Easy retrieving / storing of Data
As blockchain is a distributed ledger technology , the use of this technology for the payments and transaction records storage will make it easier for storing and retrieving process and this inturn decreases the process time of payments.
3 . Smart Contracts
A smart asset tracking system for the banks can make banking sector work effectively. A bank with wide data can turn this data into valuable information for its clients with the help of blockchain .
4 . KYC
Banking sector is widely expanded and its users is spread all over the globe and it becomes difficult for these sectors to find whether it is their customer or a fraud processing a transactions. The use of blockchain can help banking sector to know their customer and this eradicate error/cheating in payments.
5 . Low cost and Reduced Payment time
The use of decentralized blockchain technology , doesnot involve middle men or third parties and this reduces the time for the process of payments as each individual has the right to initiate the transactions. This inturn reduces the overall costs of the payment process.
Some Banks that uses Blockchain Technology
1 . The American multinational investment bank, started the Quorum specifically for research and implementation of Blockchain.
2 . Bank of America , a major US bank has filed a patent document which was published by the U.S. Patent and Trademark Office for the implementation of Blockchain.
Core Benefits of Using Blockchain in Banking
1 . As Blockchain is trusted and reliable technology which can withstand frauds, security and scalability issues in Banking .
2 . The use of blockchain technology reduces the payment process time from 4-5 days to fewer seconds.
3 . It will result in low cost transaction with faster payments .
4 . Data management and data transparancy is effective with the use of Blockchain .
Challenges in implementing Blockchain with current Banking Sector
The implementation of blockchain with current banking system completely to process smoothly is actually a great challenge.Thus if adoption of this blockchain technology allows multiple system to work effectively , smooth operations of systems can be achieved .
Privacy and Security
Banking sector is one where people expect more security and privacy for their data like information about their assets , transactions and money, etc . Thus use of blockchain provide decentralized public ledger in which providing access and permissions for each individuals must handled with greater care .
The proper implementation of blockchain in banking will result in high amount of energy consumption and this high computing power will leave large amount of carbon footprints .This will affects the environment and thus adopting blockchain becomes a complex task in banking.
There are lot of other challenges that are to be faced while adopting blockchain for banking , like encryption, legal regulation , etc.,.
Future of Banking with Blockchain Technology
Even the biggest jumbos in banking sector have started testing and finding out the best use cases of this blockchain technology . Other than that many banking organizations started investing huge amount for R and D process for blockchain based solutions to solve their issues .
Thus the entry of blockchain in banking sectors can resolve lots of problems and issues in banking sector and make banking system transparent and more reliable .
Let us all hope for the best changes in Banking System with the use of Blockchain !!!