The impact of blockchain technology on the banking industry
Nowadays, there is a real blockchain boom all over the world. Until recently, the word “blockchain” was associated only with a cryptocurrency. Every day there are more and more companies, startups and other industries are becoming interested in this technology. As a whole, it is created for decentralized, public storage and processing of records. The active use of a blockchain in the cryptocurrency sphere revealed the successes and problems of this technology as well as helped it to develop expanding the boundaries of its application.
It is well known that the banking sector today is striving to become more innovative, as it should meet the expectations of modern customers. Just think about it. People want to have quick and easy access to services and transactions, that is why they choose fast cryptocurrency sendings and make exchanges of XMR to BTC, Ethereum, DOGE, and other coins.
Banks also do not want to lag behind modern technology. Forty-five of the world’s largest banks joined the consortium in 2015 and created the company R3, which is working on the application of blockchain technology in the financial sector.
The main idea of using blockchain technology in the banking system is to decentralize markets, it means to eliminate any centralized hubs and mediators by registering, confirming and transferring any type of contracts in the accounting system. This system can be used for drawing up and accounting debt receipts, loans, deposits, various agreements, and so on.
The main scope of the blockchain in the banking sector:
- Conducting fast and cheap transfers. This is especially important for cross-border transfers and micropayments, where the bank commission may be comparable to the transfer amount.
- Ability to automate processes and quickly process operations. This reduces costs and the number of employees.
- Ensuring fair transactions. It is impossible to make changes retroactively and falsify reports. It will make all operations transparent.
Experts estimate that banks can save a lot of money due to the introduction of the blockchain.
The most famous cases of blockchain implementation in the banking area are HSBC Bank, The Spanish bank Banco Santander, and JPMorgan Chase Bank.
A methodical and consistent approach combined with a clear vision will allow the banking sector to obtain an efficient, secure and cost-effective operating model that may significantly increase profitability, savings and gain a competitive advantage in the long term.