Blockchain technology also is known as decentralized, a distributed ledger has gained greater visibility over the last few years. According to reports, it will create great value in every sector in the upcoming years.
Already many banks and startups have started investing in Blockchain technology. Making use of the advantages of distributed ledger technology several banks have conjointly launched the first-ever blockchain linked loan system in India. This enables transparency among banks.
So if you are a Banking or Financial Startup interested in cashing on the potential value of Blockchain technology, here is how it can be done for your business.
Blockchain Technology in Banking and Finance
Speeding Up Payment Transactions
Nowadays everyone is using digital Payments for sending money from one to another. But it has a lot of processes involved from intercessor financial organizations like clearinghouses, regulators and other banks to clear the payment to the receiver which actually slows down the whole process.
This is because each intercessor maintains a separate ledger which causes inefficiencies in coordinating the records.
But with blockchain maintaining every record on a single ledger which makes every transaction transparent and made unchanged through cryptography. With the help of blockchain, both the clearing and settlement of transactions are maintained on a single network.
Know Your Customer(KYC)
KYC verification is done in every bank and financial institution to prevent inappropriate use of services. This process is to establish customer identity which involves lots of documentation from managing customer’s data in various records separately for different financial services.
This makes a lot of time to identify and validating records multiple times for a single customer.
With the help of Blockchain, data is kept secure and easy to share the constantly updated information of the customers within their institutions which avoids duplication of entries.
Also read: Blockchain is the Best Substitute for IoT
Around 3% of global trade accounts from Trade Finance. There are a lot of financial steps involved in this. Trade finance includes Letters of Credit (LCs), export finance and credit agencies, receivables and invoice finance, as well as bank guarantees. This often requires lots of paperwork and Employees to carry out the procedure.
With the help of the decentralized database, these processes are made more efficient and faster and at the same time where security is maintained.
Information Exchange and Data-Sharing
Distributed Ledger Technology allows information exchanges and data sharing more secure between the related banks or Financial institutions.
Also read: Is Blockchain Dead: Instead, It's Tokenizing the Sharing Economy Using Utility Tokens
Every bank or financial institutions have a lot of signed contract between them and the clients for a business process to carry out. Basically, when contracts are signed it may be of transactions or any other important processes to be carried out within a week or moths or in the near future.
These contracts can become old as days move on. That’s why with the help of blockchain’s Smart Contracts there is no need for signed contracts where everything is made digital and can be kept in a secured manner in a decentralized database that can be used for future use.
Employcoder, A Blockchain Development Company has a team of Blockchain developers who are well versed in the latest development trends and highly experienced in implementing blockchain technology for any kind of business industry.