There no doubt that the world is curious to see how this promising technology will influence or shape the future of banking. Blockchain technology could have an enormous impact on the procedures for conducting and confirming transactions, optimizing assets, managing cash and a variety of other businesses processes which account for billions of in expenses for banks every year.
The Panacea of Banking Problems
The many interesting characteristics of Blockchain technology make it not only very attractive but also cable for solving numerous issues currently facing banks and other financial institutions.
Blockchain enhances safety in data storage and transmutation, avails a decentralized and transparent network infrastructure and significantly reduces the costs involved in operations. These remarkable attributes make blockchain a very promising and in-demand solution even in an industry as restricted as the banking sector.
Nearly all financial and credit institutions require the intervention of third parties to help them carry out their day-to-day activities. The use of mediators makes the services of these financial institutions very expensive. Blockchain takes a decentralized approach and therefore eliminates third parties; consequently, services will be available to clients at greatly reduced prices.
Blockchain will disrupt most aspects of banking.
Some of the transformations or use cases that you should expect to see include:
Banks and financial institutions can implement Blockchain technology, in general, to reduce costs and increase speed when making bank-to-bank and international transfers. Independent financial analysts and large financial companies agree that blockchain technology is very likely to replace the SWIFT bank transfer system in the near future.
Client identification system
Blockchain technology can also be applied in the banking industry to help in the creation of a decentralized client identification system. This is highly appropriate because all credit organizations need to perform KYC (Know Your Client) before processing any applications. With the use of blockchain, users will be identified on a single occasion, and the information will be stored in a secure location where all banks in the system can access it.
Loans and credits
There is a straightforward relationship between banking and financial services and insuring deposits and loans. The banking system has however been proven to be highly unreliable and vulnerable even in the most developed countries. State regulators use traditional currency to insure private bank deposits. A distributed system for loans and deposits that is based on ledger technology is not only decentralized but also immune to bankruptcy since one specific organization does not control the deposits.
Traditional insurance can also be enhanced significantly by automating payment on insurance cases. Implementation of smart contracts that are performed automatically will eradicate the long bureaucratic delays that involve a large number of managers making it possible for people to receive payments instantly.