Blockchain for Banking Industry
We have seen the great effect the blockchain can have on the future of real estate, and currently, we can see already the effect in the banking and finance industry. Taking a look back at the inception of the blockchain we remember that in 2008 Satoshi was trying to solve the problem of the banking crisis that led to the global recession. Therefore it is logical to understand
Blockchain will do to banks what the internet did to media
Harvard Business Review
Blockchain technology has all the characteristics needed by a reliable technology involving finances: it is safe, secure, decentralized, transparent and most importantly it is comparatively much cheaper than traditional systems. We’ve already discussed the importance of security, privacy and trustless systems and there it is easy to see that these already solve many issues for the banking sector.
Blockchain technology aims to do the heavy weightlifting by securing transactions and making the overall customer experience more satisfactory and less money consuming, whilst removing a large part of the
Are banks using blockchain already?
In short, the answer is YES. Although it was initially a taboo subject, the banking sector has actually made huge strides towards
One of the leaders in this Sector is JPMorgan Chase, one of the founding members of R3, the developers behind the Corda Blockchain which we mentioned in a previous post. They have now branched off into their own blockchain development under the company Quorum. Recently their intrabank payment systems have 75 major banks on the blockchain, allowing them to make transfers with little overheads, which are instant and irreversible.
In the USA, the Bank Of America is attempting to create the first permissioned blockchain which would act as a secure smart identity chain that would create a huge step forward in Decentralised Applications. This registry will allow for instantaneous authentication of businesses and personal data by participants who are authorised to do so. This system will allow huge data stores to be compressed into many connected blockchains which would not only allow vast amounts of data to be collated but also reduce the need for data stores and physical servers.
Where is blockchain used in banking and finance?
With new Blockchains and Decentralised Applications being created every day, it is clear that the banking and finance industry will be going through a period of disruption. Areas which will definitely be targeted by these new application include:
Financial Fraud
We have already touched base on Fraud in the traditional banking system and monetary transactions, and how the use of decentralised blockchain could solve this. No block can be copied, changed or removed without the consensus of the whole network, and therefore this eliminates many facets of financial fraud. It also creates an unchangeable history or log of transactions which could be traced back and investigated.
Although breaches have occurred, it is through failure that secure systems are built. As more systems are put into place to
Know Your Customer (KYC)
KYC is a very costly process for most institutions and companies, and one that is imposed on them by regulators. It is for this reason that a publicly accessible smart identity blockchain would create a synergy within all the KYC efforts of most entities and thus reduce the burden and cost of KYC. One example would be a Government or central Authority administering and maintaining a smart identity Distributed Ledger. When a bank is required to KYC it’s customer, they query the Ledger, receive all required records, and update the information with the new services. Credit ratings, Loan information and so much more can be decentralised and offered to all without the need of performing duplicate work.
Continue Reading about blockchain:
- What is Blockchain?
- Why is Blockchain Important?
- What is a Crypto Currency?
- What is an ICO?
- Are Cryptocurrencies and Tokens the same?
- Can Blockchain be used without a Coin or Token?
- Blockchain in Use (Real Estate)
- Will Blockchain replace banks? (Part 1 – Banking and Finance)
- Will Blockchain replace banks? (Part 2 – Blockchain Adoption)
- What is Distributed Ledger Technology? (Coming Soon)
- What is the future of Blockchain? (Coming Soon)
If you want to learn more about Blockchain Technology, Cryptocurrencies, ICOs, Distributed Ledgers, Smart Contracts or other fields related to the technologies, contact me using the contact page, or leave a comment below.
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