Since its evolution in 2008, blockchain technology has now rules globally as it provides decentralization and transparency. Even the banking and finance industry has been revolutionized by this technology. Although there are some obstacles in this path blockchain technology has the capability to transform both these sectors as it reduces costs and labor savings.
As this technology has various implications the companies are looking for ways of implementing it in their sector. For the systematic working of your banking and finance industries block chain services are essential which provide security to your data and any kind of financial transaction.
When we talk about the banking and finance sector thousands of data is transferred worldwide every day. Because of this reason, the global financial system will be at an advantage if this technology is used in its working.
Importance of Blockchain in Banking Industry
This technology is extremely useful for the banking sector. The renowned business reviews state that blockchain will affect banking in the same way as the internet affected the media. It has the capacity to solve a number of problems and it is very safe, secure, decentralized, and cheaper. It even provides transparency.
In the banking industry, it provides optimum security and safety when data, information and as well as money is exchanged. Due to these features, it is a promising and reliable solution for both the banking and finance industry.
Many reputed banks are making use of this technology because it provides an upgraded system that can rely upon and the issues of fraud can be handled effectively. Its decentralized nature proves useful for the banks.
Application of Blockchain in the Finance sector
Reduction in Fraud Cases
The matters where the money is involved are prone to be affected by fraudulent activities. In such cases, security is very important. Most of the financial bodies which are involved in money transfers are affected by economic losses centralized database system can be attacked by hackers and they can take all the money.
So there is a need for a secure system which is able to deal with these issues. Blockchain is the solution as it operates on a distributed database system and transactions are stored in blocks and have a cryptographic mechanism which cannot be misused.
Know Your Customer (KYC)
The banks and the financial institutes have to bear the cost to comply with know your customer (KYC) norms. The blockchain helps in the verification of each client by one bank or finance institution and it completes the KYC process and there is no need to start it again.
It is a challenging work to record the transactions (assets). Blockchain holds these records in digitized form and updates these records.
The applications of a smart contract are very important in the finance and banking industry. It is a self-executable code which is capable of running when the criteria written on it are completed. These smart contracts simplify complex processes.
Thus blockchain is a useful tool that has revolutionized the banking and financial sector. The decentralized database feature provides security and safety to all the transactions which are performed globally.