Major Benefits of Blockchain in Banking and Finance

Posted by Nikola Stojanović on July 31st, 2019

Blockchain development is the center of major innovation today.   Almost all industries are directly or indirectly involved with data storage and value transfer.

This makes blockchain technology a fit for every industrial sector.

Banking and finance are no exception although cryptocurrencies, the first use case of blockchain, are considered the arch-rivals of today’s banking systems. But blockchain’s benefits for banking stretch far beyond the boundaries of borderless currencies.

Reduced Operational Costs

Intermediaries have played an important role in the settlement of trades since the very existence of trade and finance. Even today, with automation taking over traditional work processes, intermediaries have not lost their importance in facilitating transactions. This results in an increased cost of operation for financial organizations.

Blockchain technology, however, promises a smooth and trustworthy method for carrying out transactions between two parties without any third party getting involved. This would largely reduce the cost for each transaction.

Reduced Time for Transaction Settlement

Most of the finance industry today relies on paperwork for storing data. Every intermediary involved in the process of transaction records their own set of data. This unnecessarily adds to the time of transaction.

Blockchains are a ledger where data once stored can be accessed and viewed anytime from anywhere. This minimizes the required paperwork by large, hence saving a huge amount of time.

Blockchains are not limited by geological boundaries, and so even international transactions can be settled within a matter of minutes or seconds using this technology.

Reduced Risk of Fraud

Human signatures can be forged, but the one stored on blockchains cannot be. Blockchains enable storing the most accurate digital identity of customers. This can neither be duplicated nor used in an unauthorized manner. 

Hence ensuring that financial entities know who they are settling a transaction for and that the involved party is not a fraud.

Increased Transparency

All data recorded on the blockchain can be accessed from anywhere, anytime. While public blockchains allow anyone to view this data, there are also private blockchains specially designed for financial entities. Private blockchains are such that they allow only authorized parties to access the data.

Data stored on blockchains is also time-stamped, which makes it easy to audit and verify. 

Conclusion

The advent of private blockchains has brought finance and blockchain industry closer than ever. Because blockchain offers huge benefits and is still not mainstream, this is the best time for financial organizations to start implementing this technology.

If you are as excited about blockchain as the rest of the world, TheBlockBox team would be glad to give shape to your blockchain ideas.