It is no surprise today that there are many robust technologies that have transformed the banking sector completely. Whether we talk about AI or IoT, the robust technology solutions and services have made significant changes in the banking and finance sector. And while talking about the robust technologies, there is one more that has today become a huge tech trend of the banking sector. Yes, we are talking about Blockchain in banking!
Blockchain is not a new term in the global market, but its use in enhancing the banking sector has today made it a much-talked topic of the global market. Whether we talk about cryptocurrency or added security in all the financial transactions, blockchain in banking has made the finance sector more advanced and efficient. And that’s what our today blog is all about!
In this post, we will be covering the top five amazing benefits of implementing blockchain in banking. Hope these benefits will make your mind to implement custom blockchain solutions for your banking agency. So, without wasting any further, let’s get started!
1. Peer-to-Peer Transactions
The first and foremost benefit of using blockchain in banking is that it facilitates peer-to-peer transactions. That means, when you implement blockchain technology to any of your financial solutions, then it renders the useless fee-charging intermediaries like the custodian banks, clearers, and so on. A such, blockchain, or in other words, the distributed ledger platform helps the banks and other financial institutions to cut down their operational cost while making their operations more quickly than ever.
Additionally, it may seem that the cost of implementing blockchain is higher than the cost of maintaining the transactions. But, since the blockchain in banking is a shared tech trend amongst the banks, the cost also is shred between the participating banks.
2. Reduced Frauds and Increased Transparency
Another significant benefit of implementing blockchain in banking is reduced frauds and risks. As we know that blockchain technology centralizes all the transactions happening in the banks, it eventually resists the hacking, DDOs, and other frauds of the finance sector. The blockchain systems offer a unique digital ID to every user, and as such, only that person could access or initiate the transactions, making the process secure and efficient.
Besides that, blockchain in banking even offers smart contracts that even ensure complete transparency of your digital transactions. However, before implementing smart contracts, you should know that not every user might be interested in sharing their transaction on-chain. Therefore, make sure to have encryption tools and confidential transaction solutions ready for such users.
3. Speedy Digital Transactions
Apart from providing security and transparency in your banking transactions, blockchain in banking even facilitates speedy transactions. We live in a digital world, and there are many firms that trade internationally. However, sending the money across borders was a completely tedious, slow, and bureaucratic process. But, thanks to blockchain mobile applications, it has today become simpler to trade internationally for businesses.
Bitcoin, a very popular cryptocurrency, made it possible for banks and other financial institutes to move money across different boundaries. Although not many banks have initially adopted this cryptocurrency, many of the leading agencies have already adopted Ripple or Stellar to facilitate cross-border payments using blockchain technology.
4. Instant Settlements
One of the major concerns for almost all the banks and financial institutes is settling the payments and transactions. The traditional systems consume a lot of time and resources to settle-down the payments of the users. However, the scene is somewhat different for blockchain in banking!
With custom blockchain solutions, the need for middle management and back-office resources eliminates, thus reducing the time and money needed to settle the payments. All that not only helps banks to make their brand unique but even helps them to explore more options for the growth and development of their banks.
5. New and Better Financial Products
Last but not least is better financial products. From accessibility to transparency blockchain in banking offers crowdfunding mediums that have facilitated many different types of fundraising platforms. One example is improvements in the money circle, also known as ‘rotating savings and credit association’ (ROSCA), where people save and borrow money within a group. The people of such a platform contribute and withdraw money from the same fund, and as such the platform acts as an informal financial institute.
However, there may be several trust issues while funding such types of accounts. That’s where blockchain in banking comes to play! Blockchain in banking improves transparency and trust amongst such groups and helps the members to safely access their fundings accounts. Blockchain even offers badges to these fundings platforms to create a trustworthy environment, leave reviews, and communicate.
Final Takeaway!
So those were some of the amazing benefits of using blockchain in banking. Witnessing such great improvements, we can say that blockchain solutions have. Will be completely transforming the banking and finance industry in the coming years. From transactions to the security of the user data, blockchain is all set to revolutionize all the global aspects of the banking and finance industry. Hence, it is time now to implement blockchain in your bank and financial institutes to leverage all the amazing benefits of the technology, and to make your brand successful in the market!
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