If you think blockchain can only aid the development of cryptocurrencies, and distributed ledger, then you are mistaking, as this technology has an immense potential to offer people a completely transformed ambiance.
Presently, this technology is being used for accomplishing various purposes; altogether you can find its use in almost every industry. Though, its connection with finance is a bit old and strong. Therefore, most of the financial or non-financial institutions are striving to utilize it for managing or running financial activities.
No! it is not always about cryptos. Finance and blockchain is not about cryptocurrency only.
Block this thought! and take a look at what I am referring to.
Actually, blockchain's use is permeating throughout various industries. And ! its use in the banking sector is being expected and investigated by various organizations.
To understand this you need to explore the manifolds of this technology.
BLOCKCHAIN TECHNOLOGY MANIFOLDS
This is a vast and very powerful technology, as it provides a highly competitive mean to transfer and store data with extraordinary security and transparency. Its tightly bound and secured system is able to keep the information immutable and transparent to everyone.
This technology utilizes the hashing algorithms to secure the blocks of data, so noone can tamper the information. And! each block of data comprises the two hash of previous and antecedent blocks. In this way, every block shares a connection of harmony and creates a distributed system.
This mechanism makes the blockchain system strong and secured. Though, the question is how it is useful for banking system. Here take a plunge into the sea of this vast aspect.
BlOCKCHAIN IN BANKING
Indeed, it makes sense to ask how this technology can aid in banking system? especially, when these are completely two different streams. Well! it is claimed by Harvard Business Review, that "blockchain will do the same that internet did to media".
The fact is blockchain is a very powerful technology and holds the potential to solve various problems of banking and financial organization. This technology possesses strong magnetic energy with numbers of characteristics that any reliable technology comprises. Not just it is secure, safe, decentralized but also transparent and relatively inexpensive.
This technology is robust and offers a higher level of security and safety, especially during data, money or information exchange. Altogether, it also enables users to take benefit of transparent network infrastructure in accordance with operational cost and decentralization.
All of these characteristics empower the blockchain technology with reliability and make it more beneficial yielding and in-demand solution for the finance and banking industry.
Though, the question is how it will affect the banking industry? Well! this technology will bring numerous changes. Take a glimpse of them here.
Money transfer is the core aspect of banking industry, therefore, every financial institution seeks advancement in this space. From mobile application development to cryptocurrency, everything has changed to ease down the process of money transfer. In fact, money transferring was never been easy, the way it is today.
Though, with blockchain integration, this will evolve in a great way. This is a fruit that is waiting to ripen, as banks are already utilizing this technology for remittances. Actually, blockchain-based transfers are very time saving and also reduce the cost, and consumers can gain numbers of benefits from this.
With blockchain based transfer, both money sender and receiver can complete the electronic transfer with mobile phone. It saves a lot of time and money for both. With traditional approach, the sender needs to take an errand to the money transfer office, wait for his turn, pay cash with 7 to10 percent transfer fee. And! the recipient might need to give the try to a similar process.
However, blockchain technology removes such hassle by just enabling a complete electronic money transfer with phone with a far less fee.
Inexpensive Payment Without Third-Party Intervention
You already know how cumbersome the payment processes are, the fund passes through various verticles and then reaches to the actual receiver. Normally, it includes the banks, credit/ debit card processing network and other middle entities. Every stem accumulates vast complexity, therefore each service provider expects to get some money from the service they are offering.
In such scenarios, blockchain system is a new wave of change that can benefit merchants in a variety of ways.
How? Here catch a brief sight over that:
Payment Fees: When you make payment with swipe cards, merchants pay processing fees and that fees cut the profit. An inexpensive payment network can put a halt on this profit eating and can lower the price with better competition.
Problem of inadequate fund: There are chances that your cheques for payment can bounce, that can cause loss to merchants. Or Electronic payment may fail, but the blockchain-based payment system is potential to offer the certainty within a few minutes or less. So, the problem of inadequate funds can be resolved easily.
Information About The Transaction
As mentioned, blockchain is a very secure system to save information and data, banks can utilize this attribute. It is an ultimate solution to keep track of transactions, and possible that may be critical and useful in several areas.
The property of distributed ledger makes it hard to tamper data and easy to track ownership. This technology enables easy access to all information, as all transfer details will go in ledger, and accumulates to a trustworthy source of information. That will enable each party to access information and more.
Altogether, smart contracts are another aspect that enables the automation of activities, that used to drain cost and add delays & complexity to transactions. Smart contracts enable the monitoring of buyer and seller activities. Except these, this technology holds the potential to impact other aspects including financial inclusion, reduced fraud. And can bring new wings for the banks such as a new clearance and settlement system.
With distributed systems, the banking system would get more transparent and secure.
Surely, now you would have understood how much is blockchain potential. Techugo- a known company is also utilizing this technology to create secured and high-grade applications. The fact is that the businesses are striving to wring out its potential and create app with remarkable features. To know more, get in touch with us.
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