Introduction Since its advent, the Blockchain technology has created a lot of buzz around various industries. Blockchain technology is of...
Let’s face it, Blockchain is considered one of the biggest inventions of today’s era that is underpinning various industries. Its wide dissemination in recent years and overwhelming features like decentralization, transparency, and immutability have contributed the fact that the management of financial organizations no longer denies its potential. In the financial sector, hundreds and thousands of funds are transferred regularly from one region to another. This is the reason why the finance sector is prone to frauds and errors which lead to a crippled money-management system.
The financial industry performs the crucial task of keeping the money for people, and therefore, the process in place requires a lot of intercessors. The involvement of such intercessors gives the chance to technologies like Blockchain to steal the show. It provides an effective solution by securing the transactions and making the overall customer experience hassle-free and less money consuming. But the real question that pops up into the minds of various financers is: “Is Blockchain a useful asset for the financial sector? In this blog post, we will describe how the implementation of Blockchain could turn out to be a big jump to the new crusade of the financial world in the coming days.
Blockchain: A Game Changer for the Financial industry?
- Swift financial transactions: In the financial industry, most third-party transactions consume a lot of time to process, which could probably range from a few days to weeks. The payment gateways through which these transactions pass can be replaced with Blockchain technology. It will not only provide a widespread real-time payment solution to the financial industry but also eliminate third-party payment gateways which could result in fast-paced financial transactions.
- Fraud reduction: In today’s digital era, more than 45 percent of financial intermediaries are prone to economic crime. The companies immersed in the financial sector across the globe are using a centralized database system for transaction processes and money management. Hence, it is vulnerable to cyber-attacks due to its many points of failure. As each transaction block in Blockchain has its timestamp, it can mitigate financial fraud and cut down crime in online financial transactions.
- Financial trading: The most useful application of Blockchain technology in the financial industry is trade finance. All the parties involved in a complex transaction process can be on-boarded on a Blockchain network so that the information can be shared among importers and exporters on a common distributed ledger. Also, the respective parties can view all the actions performed once certain specified conditions of the deal are met.
- Customer identification: Financial institutions spend a maximum of $500 million every year to organize customer campaigns. Processes like ‘Anti-money laundering’ and ‘Know Your Customers’ consume a lot of time & money and performed individually by all financial institutions. Taking into consideration the end-to-end transparency that Blockchain offers, each financial institution would have complete access to customer id of every other organization, which will save their time and money.
- Smart asset management: The process of finance trading becomes challenging when transactions in the form of assets are recorded with a clear date and timestamp. Blockchain’s distributed ledger ensures that the movement of assets between the parties remains fully transparent. Apart from that, asset management on a Blockchain network could solve the problems of dispute resolution and reduce the time to solve discrepancies in data.
- Accurate credit reports: Blockchain finance can help small businesses and individuals to quickly get loans on the basis of their credit history. Traditional business credit reports provided by third-party credit bureaus are not available for small business owners. Also, paying companies to access their sensitive data looks strange and insecure. Blockchain can provide tools to the borrowers so that they can make their credit reports more transparent, accurate and securely shareable instead of using third-party services.
- Safer money transfer: Financial sector involves Peer to Peer (P2P) money transfer on a daily basis. However, most P2P services involve large commissions and are not secure to store sensitive data. Such issues could be easily solved by Blockchain based decentralized apps for P2P transfers. Also, it has no geographical limitations which make it possible for people to do P2P transfers across the world.
- Share trading- Utilizing Blockchain for selling and buying shares and stocks could offer a plethora of benefits to those immersed in the financial industry. The process of share trading involves brokers, third parties, CSDs, CCPs, and money exchangers which makes it time-consuming. The decentralized nature of Blockchain can eliminate all those intermediaries, thereby escalating the settlement process and reducing the redundancy of information.
From the above-written benefits, it is certain that an ever-rising tidal wave of Blockchain powered technologies will definitely disrupt the finance industry in the coming future. In the financial world, there is an inherent lack of trust when two parties conduct a value exchange. Continuity and authenticity are the two closely related concepts in the finance industry, and without continuity, there can be no trust. This is where Blockchain finds its importance. The current financial sector is highly reliable on paper and outworn processes. So, Blockchain technology provides a high level of safety in transmitting and saving data, open and transparent network infrastructure, decentralization and low cost of operations. These impressive characteristics make Blockchain a really promising and in-demand solution, even in the extremely conservative and restricted financial industry.
Looking for skilled Blockchain developers who could incorporate peer-to-peer transactions into your finance processes? If so, then look no further than Debut Infotech. We have a team of innovative Blockchain developers who can help you integrate Blockchain technology into your business to achieve a new height of success. Visit our website or call us at +1-703-537-5009 for more information.