How Blockchain Technology Impacts The Finance Sector? A Brief Guide Here
Since its launch in the year 2008, the world has witnessed the merging of blockchain technology in various sectors.
The quality of being transparent, private, and immutable makes it high in demand. However, the journey has not been linear, and many hindrances have been faced in the implementation of the technology.
Banking and finance sector is one where the implementation of blockchain technology can be helpful. An industry where billions of transactions and funds flow daily, the inculcation of the blockchain technology can improve accuracy as well as efficiency.
Before we start making use of the technology, some questions arise in mind. Does the banking sector need blockchain technology? Will it be helpful? If yes, then how can it be utilized effectively?
Let us uncover all the questions asked above and the aspects related to the blockchain technology and finance sector.
Benefits Of The Blockchain Technology In Banking And Finance Sector
The banking sector operates on a manual network with millions and billions of transactions taking place every day. With such a vast amount of data flow, it is susceptible to some error or fraudulent activity to take place. This is where blockchain technology can be helpful.
Blockchain technology has the potential to ensure the smooth operation of the finance sectors. The perks of being a private platform, decentralized, secure and immutable make it appropriate for the finance sector.
The ability of the user to access the network at a low operational cost further enhances the ease of usage for an ordinary person. Transactions taking place on the blockchain network are secure and reliable and ensure in-demand facilities for the finance sector.
The money exchange process using the blockchain network demands less transactional/processing fees, enhancing its value.
Another benefit can be reduced paperwork and more digitization of information that will ultimately make it easy to manage.
Examples of banks using blockchain
Initially, the term blockchain was a topic of controversy for the financial institutions. A platform not reliable enough to invest soon with improvisation became the hot topic amongst every industry and so for the banking and finance industry as well. Let us view some leading financial institutions that have faith in the blockchain technology and has operation based on it-
JP Morgan: The multinational American institution lending its banking and finance services has its working based on blockchain technology. Its headquarter at New York City has devised a Quorum division, i.e. a particular unit for the research and development of implementing blockchain technology in its mechanism to offer speedy transactions and processing.
Bank of America: The leading banking has announced to implement blockchain technology for securing records as well as to collate data for increased overall efficiency.
Goldman Sachs: Venturing the most funding project based on the cryptocurrency, Circle, aims to build reliability by addressing the significant problems faced in incorporating blockchain technology in banking and finance solutions.
Blockchain development services are being widely accessed by the finance sectors as a solution to the slow-paced and time-consuming operations.
Applications of blockchain technology
Now when you are aware of the potential of blockchain technology and ventures of some leading financial institutions, let us discuss the applications of the blockchain technology-
- Fraud prevention: There are many cases that the fintech deal sector come across of the fraudulent activities and the monetary loss caused by it. A centralized database management can be blamed for it. However, with the use of blockchain technology, each transaction has a dedicated block making it a secure platform comparatively.
- KYC procedure: The traditional method of fulfilling KYC norms is expensive and not very accurate. Using the blockchain technology will ensure that the process gets secure and unified.
- Smart Assets: With the help of blockchain technology, it will be easier to store and track the information of the transactions made in the form of assets.
Above written statements address the concern related to blockchain technology and its application in the finance industry. The blockchain has made a significant place in finance-related operations of many industries. Initially faced with lots of challenges, the improvisation in the technology made it reliable, gradually.
The feature-rich technology is no more limited to the transactions of digital currency but has evolved and is being applied in the efficient management of transactions, assets, data, and many more.