Even in its infancy, the revolutionary blockchain technology is already proving its ability to revolutionize the way that several industries function. By introducing the features of decentralization, immutability, and transparency, blockchain technology is appealing to a wide range of business sectors across the globe. In recent years, we have witnessed that the Financial Services industry has been one of the quickest to adapt to, and implement the benefits of blockchain technology into its fold.
Blockchain technology acts as a decentralized, distributed, and public ledger that records transactions across several computers within a network. Because of the way it is designed, blockchain is transparent, secure, and almost impossible to alter.
Distribution: Several copies of the ledger are created throughout the network. Every time a new transaction is added, every device within the network gets a copy. Therefore, no single entity has control over the ledger, and the system provides everyone with the same information.
Immutability: Blockchain provides an accurate, chronological history of transactions, and because every person within the network has a copy, it’s almost impossible to alter or erase information that hasn’t been verified.
Blockchain’s impact on financial services is one of the most exciting and revolutionary innovations in the finance industry, which can help to reduce fraud, enable quicker and more secure transactions and trades, and efficiently help manage risk within the hyperconnected global financial system.
Let’s look at some of the ways in which Banking & Finance institutions are harnessing the power of Blockchain in financial services
Every year, billions of dollars are transferred internationally, and the process has traditionally been expensive, laborious, and prone to errors, which presents several problems for consumers and financial institutions.
Blockchain in financial services is beginning to change all this. Major banks and financial institutions have adopted making international payments with blockchain technology, which addresses their concerns of safety. Consumers now also use blockchain money transfers to make electronic transfers from anywhere, to anywhere, with their mobile devices.
Blockchain-based financial transactions benefit the merchants by reducing or eliminating the transaction fees that merchants usually have to pay to financial institutions to process their transactions. They also give merchants the ability to know if a transaction is “good” (meaning that there are sufficient funds to clear payment) within seconds.
Individual consumers benefit from blockchain-based transactions, as they are quick and reversible, hence much less prone to scams. They also eliminate the untraceability of cash, the time-consuming process of wire transfers, and the forgery-prone method of cashier’s checks.
Blockchain technology is an excellent way to keep track of transactions, as it ensures the secure transmission of accurate data. Transfers of ownership and liens can refer to the distributed ledger, which is nearly impossible to alter, to verify information.
Smart contracts have the functionality to track when the buyer pays and when the seller delivers, and also address any problems that might arise during the process. In addition, automated systems work 24/7 and also reduce human error.
The low costs of Blockchain give startups a fighting chance to compete with established banks and financial institutions, thus promoting financial inclusion. This gives the consumers an alternative to banks where they face restrictions like minimum balance requirements, low access, and banking fees. Blockchain can provide a feasible alternative to traditional banking that uses digital identification through mobile devices.
Blockchain technology helps store information in a ledger with precise transaction information within each block, and a unique hash referring to the previous block. Every device within the network receives a copy of every transaction as well. Because of these security features, blockchain technology is completely resistant to distributed denial-of-service attacks, hackers, and other kinds of cyber attacks and fraud.
Digital currencies are the modern day assets that rely on blockchain technology. Although cryptocurrency is already in use, blockchain is lowering the barrier of entry and making it possible for a seamless exchange of the popular cryptocurrencies as an alternative to banking.
The world is moving away and ahead of the strict rules and regulations that currently stifle the banking industry. Financial institutions are quickly realizing the potential of blockchain technology, and the major players in these industries are continually conducting tests to discover innovative use cases and opportunities for blockchain technology. In the near future, we will begin to see more blockchain-based solutions for transparent, accessible, and reliable financial transactions.
If you are excited by digital innovation and are interested in exploring how cutting-edge technology solutions can transform your business or organization, contact us and our team of digital transformation experts will be happy to help!
At Web Synergies, we specialize in designing customized, value-rich digital solutions for clients across various industries and regions, depending on their unique needs and preferences. Our team of technology experts are trained and experienced in taking the customer-centric approach when it comes to creating cutting-edge technology solutions.