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The days are gone when the ledger books were kept for maintaining transaction-related records. It is completely switched by the modern-day centralized system where the speed of the transactions has improved drastically. Talks are in for the implementation of blockchain in the banking industry.
Blockchain has been in the news for a decade now. It has successfully captured a lot of attention in various industries. Blockchain is a virtual world where there are embedded contracts saved in shared databases. All the data is secured from manipulation like addition or deletion.
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Whatever task is performed and the process is adopted, everything is recorded in a digital format. Since its launch, the primary focus was to utilize this magnificent technology in providing transparency and security. Its application was initially focused on the domains like healthcare, real estate, supply chains, etc. But gradually with time, its importance is completely felt in the banking sector. Blockchain technology in banking has immense potential to build a world with reduced friction and enhanced reliability.
To get a complete guide on blockchain technology in the banking sector, let’s have a look below!
Now, talking about the implementation of the blockchain in the banking sector, in the first instance, several pilot projects were executed in the finance field. The banking technology in finance sector is set to break several records. The most fascinating one is that all the operations were performed in a similar way as the blockchain and that too at a reduced cost.
With constant efforts, it has been found that the amazing modernization in technology, especially in the virtual world has created enormous opportunities. The attitude of the business entrepreneurs and even the normal people have been drastically transformed in these recent times. This is an incredible time to invest in crypto assets.
The foremost thing is to enhance the already existing services and products and replace them with affordable yet high-standard services. Blockchain technology is implemented in numerous use cases. The fin-tech blockchain use cases are rapidly evolving as they provides financial services more efficiently using the latest tools and technologies. It will result in the launching the new fields of banking services. Their introduction is necessary because all the customers and the users will be provided with a secure, quick, affordable, and comprehensive transaction.
Blockchain is nothing but a series of blocks that contains data and involves a progression of coupled transactions in a continuous format. Blockchain improves the productivity and effectiveness of any system. The same goes for the banking field where trans-border transactions take place in actual time. Before anything else, banks all over the countries should take the initiative and start with the implementation part.
Banks were formed to connect various sections of people to have an exchange of trade and commerce. With the evolution in this field, its scope became global and popular to keep your money safe and secure. Everything is now maintained digitally and ease is felt when the transaction takes place.
But still, there is some ambiguity that does not allow proper transparency. This means that the users are not able to get the exact information about what kind of transactions are taking place behind the scenes.
To take everything in control, blockchain technology has built a common platform where both the parties can connect with each other and exchange data at a much more rapid speed thereby maintaining efficiency. The growth in trade is directly proportional to the inter-relation between the communities. As it is a decentralized system, there is no dominance of any single entity. All the members enjoy the same perks and therefore, it acts as a fabulous tool.
Blockchain technology has the capability to revolutionize the way in which business is done globally. It has the potential to enhance the trade-related performance and smooth functioning of any manual or paper-based functioning. Blockchain is the best and provides unlimited perks by enjoying support from the cryptocurrencies like Ethereum and bitcoin.
Suffescom Solutions Inc., a leading FinTech blockchain development company, assists FinTech startups and businesses in harnessing the true potential of blockchain.
Off Lately the banking industry is facing some massive challenges. There is a lack of transparency and it has become very difficult to keep the check and balance. Though we are living in the digital era, still there are problems that need to be solved. This is because there has been a drastic shift in the financial sector. With advanced technologies, it has also created things a bit difficult.
Below are the top use cases of the blockchain in the banking industry that will help you understand how the financial services industry will overcome these issues.
Have a look below!
Safekeeping other people’s money is an intricate matter. It requires a lot of attention to avoid errors. A bank is a place where people safeguard their financial assets from fraudsters. So, for this, every necessary detail of the consumer is taken. The idea is great but the execution consumes a lot of time. The main thing that protects the data is the authorization process. The mode of operation is just average and does not guarantee 100% protection.
To handle situations like this, blockchain technology is applied in the current banking scenario. The working corresponds in a way that once the consumer is taken on board for the first time, every information is kept within the database. So, every time add new data, the database is updated automatically. The information upgraded and shared is extremely relevant and accurate between the banks and the loan officers.
It is seen that the transference of money from one bank account to another takes time. Sometimes, when someone has to transfer a huge amount globally then the time consumed is just unbearable.it happens because a lot of protocols come into play. One of them is the SWIFT protocol which allows the transaction to take place via electronic messages to perform day-to-day business.
The steps involved in the clearance and settlement of money comprise ample steps. From the source to the destination, there are intermediaries known as custodial services. The procedure involved in the entire process is very complex and exhausting. To eliminate factors like these, the blockchain is applied to make the whole mechanism seamless. The time and cost are saved drastically. There is complete lucidity in the mode of functioning and every transaction is monitored with great precision.
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The conventional form of fundraising involves steps like arranging a meeting with contemporary business owners. They put forward their idea and conduct many consultations with them. After that comes the part, where negotiations take place for both parties. It is mostly based on equity and valuation.it is after this step that it will be decided whether it was a successful or unsuccessful event.
By the above framework, it is quite evident that the work structure is very tedious. With the help of blockchain, these boring steps are reduced and many superior options are provided. These include initial exchange offering(IEO), security token offering(STO), equity token offering (ETO), etc. These mentioned things have the potential to take the conventional form of raising funds to another level.
This is simply the transfer of the money from one bank account (sender) to another(receiver). The transaction takes place through any means like mobile or net banking. Now, the major concern that they face is that it does not support any form of international transactions. There is a vulnerability towards security issues. Also, the foremost thing is that the money could be sent to the wrong account. Besides this, it is nearly impossible to get refunds.
The P2P transfer is quick and reliable with an extremely short span of downtime. They are affordable and can be executed very smoothly. This kind of transaction is very secure and is easy to establish and maintain. They have already started replacing the current modes of transaction like cash, credit/debit cards, cheques, wallets, gift cards, and so on. The blockchain implementation has resulted in error-free and faster money transference, high security, putting an end to the expensive money exchanges, etc.
In this digital era, where nothing can be hidden from the public. The utmost level of lucidity is the need of the hour and this is what is expected from the higher authorities. If blockchain is applied to this domain then people will know where the exact amount of their hard-earned money is going. For instance: If the government has taken a tax from the people to construct roads, buildings, or dams. Then, this advanced technology will have a full-proof database that has complete details of the expenses.
The prime objective of its application is to let people know where the capital is actually utilized. This will build trust among the people and the government. Also, it will play a huge part in eliminating corruption and fraud. A clear picture will be presented in front of the public and this will solve the issues related to transparency. On the other hand, the govt. will try to not adhere themselves to any malicious activity so that their image is tarnished in the public eye.
The progression in the technological spectrum has made many advancements in the functioning of banking. But with the continuous up-gradation, the programs that were applied at that stage do not hold that power now. There needs to be an overhauling in this matter. The technologies that were applied to enhance financial and economic activities are proving to be weaker now. So, with change in time, a change in technology is also required.
Our banking sector is currently working on archaic modules and software's. This is the biggest reason behind the glitches and system failures that take place every now and then. There are frequent system failures that equally annoy the employees and the customers. The installed application software's have numerous problems due to which they fall prey to hacking.
To perform the daily activities of the banking like transactions, maintenance, clearing of cheques, bills, and payment settlement, a very robust infrastructure is required. The stronger the platform is, the more money is invested in its servicing. Blockchain is a peer-to-peer (P2P) network for the data disposition that discards the capabilities and limits the dependence on the intermediaries. With everything working perfectly, there is a great cost reduction.
The banking industry is always under scrutiny because of the issues that it constantly faces. Usually, there are times when the basic program faces certain errors due to unknown causes. At that time all the important details are vulnerable, so security should be provided. Blockchain has all the potential to offer the security of a top-notch level.
There is a flawless distributed network with cryptographic protection that provides authentication only to the authorized members of the network. There are various blockchain protocols that are responsible for providing an additional layer of security to the platform. As this is a decentralized form of network, therefore the chances of data breaches and collapsing are next to impossible.
The most fascinating thing about enterprises blockchain technology is that it has the ability to digitize assets that are in physical form. Several cryptocurrencies like bitcoin, ether, binance coin, tether, etc are all attached to the fiat currency. Crypto banking solutions has the power to make the financial system a safer place.
It enables the central bank companies, individuals, and non-banking financial institutions to settle the money directly as compared to the deposits. This limits the concentration of the liquidity and risk of credit in the payment system. The cheapest and the fastest money transfers are achieved by the utilization of digital currencies.
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Blockchain in banking sector is set to experience immense success in the upcoming times. With the massive applications in the relevant industry, it is set to outperform and impact the financial industry in diverse ways.
If you are interested in developing a White Label Digital Banking App & Platform, then we at Suffescom Solutions are an experienced team of blockchain developers that will guide you through the whole process.
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