Blockchain comes with various benefits for the banking system, such as reduced costs, enabling faster Transactions, and improved security.
FREMONT, CA: Considering how blockchain is changing the dynamics of many industries, it's no surprise that blockchain has become a buzzword for the past few years. Not just in the banking industry but also in healthcare, government, retail, and other sectors, blockchain technology is expected to revolutionize the way individuals do business.
Blockchains are distributed ledgers that create unchangeable records of transactions among users that are openly shared among disparate users. These transactions are cryptographically secured to prevent tampering.
Blockchain technology will change the banking system in several ways, which are described below:
Increasing security and reducing fraud: As blockchain creates a clear audit trail, it can also help to eliminate fraud. The network also has multiple redundancies, so it is almost impossible to change any information once it has been uploaded.
Hackers cannot attack the Blockchain network and change data without leaving evidence since the network is maintained by thousands of computers. Due to these aspects of blockchain, cybercrime and ransomware attacks can compromise sensitive information and cause victims to lose hundreds of thousands of dollars.
Reducing bank and customer costs: Banking services can be significantly reduced in cost, and quality can be improved
by using blockchain.
To solve the speed and cost problems, financial institutions are implementing this technology today. Blockchain can automate tasks. Blockchain is a distributed database that is safe, transparent, and easy to implement. These features make it possible to automate some banking activities, such as payments and loan insurance.
Reducing human error: Human errors in accounting, record-keeping, and reconciliation are among the most common causes of fraud, according to various studies. Cybersecurity issues are often the result of innocent human errors or simple negligence in security operations.
With blockchain technology, transactions can be recorded automatically in an incorruptible way. Through the use of this technology, many manual processes will be eliminated, reducing human error, improving efficiency, and mitigating cyber threats.
Making lending easier for borrowers and lenders: As a result of blockchain technology, lending will gradually become easier since transactions will be settled instantly. As a result, problems such as double spending and defaulting can be avoided. The blockchain can also reduce the time it takes to open a bank account from days to minutes.
Eliminating middlemen and commissions: By using a shared ledger, blockchain allows people to trade directly with one another. As a result, stock exchanges and banks are no longer needed as middlemen.
In the event that banks are cut out of the loop, there is an inevitable risk that their share prices will suffer. It's not so clear-cut for middlemen such as stock exchanges, which provide essential services for trading stocks. Blockchain technology may still allow brokers to make money from broker fees, but the days of cashing in on broker fees are likely to be over soon.
