The Beginners Guide To Blockchain In Financial Services
Over the past few years, blockchain technology has become popular as the underlying system that powers digital currency like Bitcoin. However, that’s just one application of blockchain technology, and the potential uses of this groundbreaking innovation in financial services are still being discovered and explored.
This article gives you an overview of blockchain in financial services—what it can do today and where it might go tomorrow—and offers advice on how you can capitalize on the opportunities that exist today with blockchain technology in financial services.
Blockchain technology was originally created as the digital ledger for Bitcoin, the world’s first decentralized cryptocurrency. Now that blockchain in financial services has proven its utility in this industry, banks and other financial services providers are looking to incorporate it into their operations to streamline how they send money and keep track of transactions.
However, the distributed nature of blockchain means that there’s an entire learning curve associated with integrating it into your business model—unless you know what you’re doing.
If you’re interested in financial services, you’ve likely heard of blockchain and how it will revolutionize the industry as we know it today. Blockchain technology has been popularized as the backbone of cryptocurrency, but there’s so much more to it than that.
Here’s everything you need to know about blockchain in financial sector and how it will change the future of the industry in ways you never imagined!
Understanding Blockchain In Financial Services
What is Blockchain in financial services?
Blockchain is a digital ledger that records transactions between two parties efficiently and in a verifiable and permanent way. Blocks are added to the chain one at a time, meaning they are linked and secured using cryptography.
Blockchain in financial services has the potential to transform the sector by providing transparency, security, and efficiency when dealing with transactions. The technology is used as a public online ledger of economic transactions that shows who owns what at any given point in time without the need for intermediaries such as banks.
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What is the impact of blockchain in financial services?
Blockchain Technology is rapidly becoming the preferred method of information sharing between financial institutions. Originally developed for the digital currency Bitcoin, blockchain in financial sector records transactions and stores them on a public digital ledger.
Through this distributed process, two or more parties can enter into an agreement with no need for an intermediary or central authority since all blockchain participants already have shared access to all past records (records cannot be edited once entered).
The futuristic technology has the potential to change the way financial services are delivered. It is a form of distributed ledger technology that facilitates the transfer of assets over the internet without a centralized system.
Blockchain in financial services will be able to create new revenue streams and cost savings for banks, credit card companies, and other financial service providers.
The technology could also eliminate some compliance costs for these firms as well. It will also reduce risks because blockchain creates immutable records on an unchangeable ledger that cannot be altered by human or machine error.
Find out if your institution will benefit from blockchain as it is currently being implemented and don’t waste time jumping ahead of the curve before there’s actually enough demand – yet, use what you know now to prepare!
The Benefits of Blockchain in Financial Services: How This Technology Can Revolutionize the Industry
Although blockchain technology has been around since 2008, it wasn’t until 2017 that it really gained public interest and media attention in financial services. This was due to the meteoric rise in the price of bitcoin during the year, which led to public speculation about the possible uses and benefits of blockchain in financial services.
When people hear the word blockchain, they often think of cryptocurrencies like bitcoin, but there are many other benefits to using this technology. From improving operational efficiency to enhancing security, here are just five ways that blockchain in financial sector can help service providers and the customers who use them.
1) Faster transactions
Blockchain technology in financial services has the potential to significantly increase transaction speed and decrease costs. It can also provide increased security, transparency, and verifiability. The technology could enable banks to offer their customers real-time account updates as well as other financial services on a 24/7 basis.
2) Decentralized systems are more secure
Decentralized systems are more secure than centralized ones because they don’t have a central point of failure. This makes them much less vulnerable to hacking and other cyber threats. Furthermore, as the blockchain is spread across many computers, there is no single entity that can control the information contained within it.
Hence, blockchain in financial services can increase systems credibility without a middleman, streamlining the comprehensive operation.
3) Lower costs for international payments
Blockchain technology in financial sector has the potential to reduce the cost of international payments by eliminating intermediaries and reducing clearing times. This can be accomplished by shifting from a traditional payment system, where each country has its own currency, to a blockchain-based system that would allow for currency conversions only at the time a transaction is made.
The most noteworthy benefits of blockchain in financial services is that financial transactions across borders can be resolved swiftly and affordably.
4) New business models using smart contracts
Blockchain in financial sector possesses the possibility to disrupt how financial institutions operate. Likewise, it has the ability to change how we think about contracts and transactions, and fundamentally change the industry as a whole.
First, smart contracts have made it possible for decentralized autonomous organizations (DAO) to exist. DAOs are companies that exist entirely on a blockchain platform and function without a central authority or any form of hierarchy whatsoever.
Ultimately, the use of blockchain in financial services can do away with the requirement for 3rd-party regulators since smart contracts can be utilized to build guidelines.
5) Regulation and compliance
Blockchain technology in financial sector offers a new and innovative way to regulate compliance. It has the potential to revolutionize how information is exchanged, stored, and governed.
It relies on cryptography for security, which makes it difficult for hackers to infiltrate data. With this new technology, compliance teams will be able to monitor transactions in real time with high levels of accuracy.
Blockchain in financial services is indeed very beneficial and capable of resolving important problems facing the sector.
5 Leading Application Of Blockchain In Financial Services Today
The application of Blockchain in financial services has been there since the 1990s, even though it wasn’t officially coined as blockchain until 2008 by Satoshi Nakamoto, who applied it to the Bitcoin digital currency.
Since Bitcoin’s inception, blockchain in financial sector has become increasingly important and blockchain uses in financial services going exponentially. Not only has it brought greater security to financial transactions, but it has also created new opportunities and business models that were previously impossible with the current infrastructure.
Next, it’s made quite an impact on how financial transactions and data are stored, shared, and analyzed in both the private and public sectors. Here are five current use of blockchain in financial services you might not have heard about yet.
1) Blockchain simplifies business processes
Blockchain technology in financial sector simplifies business processes and creates trust between parties, making it a valuable technology.
For example, Bank of America uses blockchain to streamline lending operations. The bank has a pilot program that automates the process of collateralizing loans through smart contracts with the help of Microsoft Azure, which tracks transaction histories on an immutable distributed ledger.
In addition, JPMorgan Chase partnered with EY on a blockchain solution that automates credit derivatives trades by reducing post-trade processing time from hours to minutes. With smart contracts executing all major trade steps, the need for reconciliations and reconciliation systems would be eliminated altogether.
Hence, blockchain uses in financial services can facilitate a secure world for bankers.
2) Banking the unbanked
Banking the unbanked can be accomplished through mobile banking, which enables customers to deposit and withdraw money, transfer funds to other accounts, pay bills and buy goods or services.
This type of banking has grown due to an increase in smartphones and mobile phone subscriptions. With so many people owning a smartphone, this is one way for banks to reach the people who cannot come into a branch or go through the process of opening a bank account.
Blockchain in financial services is leading the way in revolutionizing the banking sector for a better world.
3) Invoice Management and Billing Solution
Invoice management and billing solutions offer a way for businesses to get paid faster. They can also help eliminate the problem of invoices that are never paid or bills that are not paid on time.
With blockchain technology in financial sector, organizations utilize smart contracts to enter invoices on the blockchain. The blockchain can be used to store data such as the payment deadline, the required payment amount, and customer details. When the person pays the bill, the smart contract updates the status of the invoice to “paid” and notifies the businesses that the customer has made the payment.
Blockchain in financial services may be used to determine whether a customer is secure enough to deal with.
4) Financial Record Keeping
A lot of people still don’t know how to use a QR code, but with the new mobile banking apps, it’s so easy to scan and complete your transaction. Imagine if you had all of your records stored on a system that was secure and accessible 24/7.
You would no longer have to worry about lost documents or paper trails, and you’d be able to find the information you need quickly and accurately.
As a result, the use of blockchain in financial services enables institutions to make their banking systems more transparent.
5) Cutting remittance costs
Blockchain technology in financial services promises to reduce remittance costs by removing the need for a third party. The remittance problem occurs when a person sends money from one country to another and then has to pay an exorbitant amount of fees. This happens because there are a lot of hands that touch the money on its way from Point A to Point B, and at each point, someone gets a piece of the pie.
With cryptocurrency-based remittance, the money can be sent to the recipient almost instantly and at a fraction of the cost. For example, Abra (a mobile app) charges just 3% for P2P transfers with no minimum or maximum limit. It also provides access to 250+ currencies and 25 different languages.
So there you have it, a beginner’s guide to blockchain in financial services. We can clearly imagine the potential it has to revolutionize the way we interact with the financial world. As more and more financial institutions begin to explore and experiment with blockchain, we are likely to see more widespread adoption of this transformative technology.
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Are you ready to join the blockchain revolution?
Blockchain in financial services is disrupting the sector, but it’s still not too late for you to get involved! If you’re not on the blockchain bandwagon yet, now is the time to jump on. With so many industries and businesses turning to blockchain technology, there’s no better time to get ahead of the curve. Who knows, you could be the next big thing in the blockchain world. So what are you waiting for?
Learn How Sjain Ventures Could Help You Implement Blockchain Technology
Whether you want to strengthen your organization by utilizing blockchain for tokenization, digital identity verification, or cryptocurrency payment methods, Sjain Ventures is an out-of-the-box blockchain solution provider capable of meeting your needs.
Sjain Ventures could help you implement blockchain technology in a number of ways. We have a team of experts who are familiar with the technology and can help you integrate it into your business. We also have a number of resources that can help you learn more about the technology and how to use it.
To learn more about how blockchain and Sjain Ventures’s expertise could transform your operations, visit our website and get in touch with us today.