Blockchain in banking

Blockchain is the next step in digital evolution. Do you understand it?

Blockchain in banking


Banking is one of the top industries that people want to hack. Physically in a high-street branch that might be for money, but if it’s online there could be a host of reasons why – money of course, but one of the top reasons is information. It is arguably far more valuable.

Therefore banking requires the highest security. Blockchain is a technology that can be moulded and utilised for any industry but it is in banking and finance that it is most commonly known. You just have to mention the words “cryptocurrency” or “Bitcoin”.

Blockchain technology is able to eliminate risks and threats of fraud in all areas of banking; this has been years in the making. Many software IT companies have tried and failed.

It is also could be applied to the global trading platforms and ensure all transactions were above board and transparent.  Blockchain would provide a permanent, irreversible and inerasable historic record which would sit behind every asset through the whole supply chain.

Blockchain’s effectiveness can be explained at the corporate level – for example with a bank taking a company/corporation on as new customer, there are a myriad security checks (known as KYC – Know Your Customer) that cost an average bank over £35million per year and are required, which means it can take sometimes over a month to fully get a customer on board. With Blockchain, there would be no need for such a lengthy process. That would speed up business transactions and save money … good for all.

It can also be used to reduce fraud as traditionally bank ledgers have been stored on a central database in one place, which is incredibly vulnerable to cyber-attacks. Often they are running old software as well.

As the Blockchain is decentralized, hackers would not try to touch it. Payments could be made in real time with complete transparency. As Blockchain is checked at every single stage with all data being open and publically available, people can analyse transactions in real time. The Blockchain ledger will always be a historical record of all documents shared and compliance activities undertaken. Any attempt at hacking makes the hack part of the data – therefore that is why you cannot hack Blockchain. The hurdles to worldwide adoption of Blockchain in banking are that it would require collaboration across countries and companies.

Where the individual could benefit from Blockchain in banking is through payments. All the rationale detailed above can be applied when discussing applying Blockchain to payments. Banks’ operational costs would be lowered and security would be of the highest order. Also, it could mean that banking could operate 24/7 via Blockchain. The new generation of millennial workers operate outside of traditional working hours and want a better way to operate. People are expecting faster services and banking has to keep up with expectation.

The last step to be discovered (presumably by a FinTech start-up) is to find a protocol to ensure that the Blockchain networks connect with other Blockchain networks via an “inter-ledger” protocol. Mr Financial is confident that once mankind has made that step – it’ll be a case of “when”, not “if”.

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