Gone are the days wherein blockchain was ignored by financial institutions. Today, even government, banks, and huge financial tech giants are already seeing Blockchain as one of the most promising technology today.
What makes Blockchain a promising technology?
How can banks use Blockchain?
Blockchain allows multiple parties to have simultaneous access to a constantly updated digital ledger that cannot be altered.
People used to see it as a Ponzi scheme as the technology was used to support digital currencies today, specifically Bitcoin. Banks and government were skeptical about blockchain’s technology before, but now everything has changed.
Blockchain has become the hottest technology today.
Now the question is, why did the central bank, along with the other banks from around the globe, had a change of heart towards Blockchain? How can Blockchain help the banks in making their service even better?
Check out this top 5 ways on how Blockchain can support banks’ services:
1. Save Billions of Expenses
Banks use Blockchain to save them from expenses. We know how crazy it can get for banks to have records well-organized and protected. What people do not know is how expensive it is for banks to keep their records tidy and secured from all the hackers around the world. It is so expensive that banks usually spend billions of dollars just to keep the accounts protected. With the help of blockchain, banks could save billions only by using blockchain technology and also improves their efficiency of clearing and settlement.
Central banks around the world are already thinking about shifting their payments to digital currencies. Digital currencies are getting attention lately, from billionaires to huge tech companies. The demand in cryptocurrency is increasing, and that is a fact. We all know that cryptocurrencies today are supported by Blockchain technology. It’s either they catch up with the world’s fast-rising innovation, or they will end up being left out by the huge changes that are happening right now in the finance industry.
3. Trade Finance
Trade finance today is still done on paper, such as bills of lading or letters of credit, being sent by fax or post around the world. Seriously, this calls the help for modernization! And there’s no other obvious solution to this problem but Blockchain technology. When data needs to be accessed by many people simultaneously without the fear of the data being altered, Blockchain is the best way to go.
Banks serve as the guardians of people’s money. One of the important tasks in banks is verifying identities. Once banks lose their credibility in verifying identities, this could surely mean bankruptcy for the company as it is part of their primary purpose in the industry. With the help of blockchain’s cryptographic protection and its ability to share a constantly updated record with many parties, this could help avoid the inefficiency of verifying accounts online.
5. Faster Transaction
Usually, it takes on more or less 19 days for syndicated loan transactions to be settled by banks. Today, a loan transaction is still done by fax. Emmanuel Aidoo, head of the blockchain at Credit Suisse once said that blockchain is the perfect vehicle for managing the lifecycle of loans. Yes, with the help of blockchain, transactions will be done faster without giving up the privacy of the transaction.