Blockchain has highly elevated the banking sector for good. As per the reports from Statista, the apps developed with blockchain for banking are expected to reach a market size of approximately 22.5 billion U.S. dollars in 2026, which also directs us to the lead that blockchain is the future. People from the banking sector reading this blog are familiar with the word Blockchain.
Blockchain – as the name suggests, placing individual data blocks to form a chain or a sequence; is the simplified meaning of what this technology does. The blockchain (an example of FinTech = Finance + Technology) technology is an open-source and decentralized foundation (open for everyone) where we can record or store immutable digital information permanently, and that cannot be manipulated, hacked, or destroyed.
Features of Blockchain
The use of blockchain in the banking sector has accelerated the demand for banking apps, in the industry. It has also elevated the approach of people doing business. Besides that, we all know that availing all the banking facilities on your fingertips through an app is far better than standing in long queues, which has made more ways for banks to integrate blockchain technology.
The primary and the most important features of blockchain are –
- No Mediator – Blockchain provides immutable transaction services, and hence it eradicates the risks of getting hacked or destroyed, which also, in turn, eliminates the middleman and the multiple layers in the ecosystem. In addition, the work is sped up and costs are reduced.
- Transparent Nature – Since blockchain is decentralized and open-source, it records all the actions and transactions, making it easy for everyone to view the activities present in the ecosystem. Thus, being transparent in nature. (Note – Although the activities are visible to everyone, there is nothing to fear, for the data stored is immutable and cannot be manipulated).
- Safe and Secure – Blockchain uses Cryptography (conversion of ordinary data or information into impossible-to-understand gibberish) to protect the data from unauthorized access and where every user has a private passkey. Additionally, if anyone tries to change or manipulate the data stored, it will be visible to everyone, and the original copy is stored safely, for future use and references.
Advantages of Blockchain in the Banking Industry
Blockchain has the potential to bring revolution and change the banking experience for the users. The following is a list of a few advantages that you can gain from integrating blockchain into your banking app.
- Fast and Easy Payments – The main advantage of blockchain in banking apps is that it facilitates super-fast and easy payments. It will also help banks offer better services by speeding up all the banking functions, improving customer satisfaction, secured functionalities, and lesser processing fees.
- Real-Time Tracking – Blockchain also allows you to keep track of real-time data. It allows the bank to settle their transactions daily by digitizing all the payments and eventually making it easy for both the bank and the users.
- Extra Security – Blockchain allows you to keep all your digital data safe and secure. That data cannot be changed, deleted, or destroyed, and if anyone tries to do so, it will be visible to everyone present in the ecosystem. Although the bonus point about integrating blockchain is that the original file of your data will be still kept safe and can be accessed only with your private passkey. An added benefit is that it also makes your transactions more secure, and ultimately you can rely on banking apps and avoid all the risks.
- Simplified Workflow – Integrating blockchain in the Banking industry is always a thumbs up. What adds more to it is that it optimizes the work and eases the complex work. Many banks still use a complex process to record all the transactions which in turn also complicates their work, and blockchain eliminates the paperwork and the problems that happen because of the manual process.
- Buying and Selling assets – Blockchain does not have any mediator, and this is why there are lower payment processing fees, and it also speeds up the process. According to a source from the Internet, blockchain has the potential to save $17 to $24 million each year in global trade processing fees.
- Digital Identity Verification – Banks cannot process any transaction or other banking activities without any identity verification, which includes multiple steps. To skip this manual process of verification, the integration of blockchain in banking has accelerated the verification process and made it more efficient, secure, and reliable for users.
- Less Time-Consuming – Blockchain in banking has also fastened the work process by facilitating its users with P2P transactions. Besides this, it also reduces paperwork, eliminates multiple layers, and settles the transactions quickly, which in turn helps banks to rebuild themselves with speed and accuracy.
- Blockchain for Cross Border Payments – Blockchain has eased the way for cross-border payments, mainly because it has reduced the cost and has made the process efficient. It offers payment settlement anytime, global interoperability, a highly encrypted database, and ultimately quicker actions without intermediaries such as correspondent banks.
Suggested Approach for Blockchain in Banking
Blockchain is much more than cryptocurrency or bitcoin and is also best known for its use in recording transactions. It has brought remarkable transformation in the banking sector.
As per a report, 66% of banks are looking to integrate blockchain in commercial production and scale in the next four years. What makes it stand out in the market is, the streamlined process, easier, and faster payments highlighted secured and reliable payment system, and many more properties.
Technology has already eased the workload, and the integration of blockchain in banking will also reduce future costs. Blockchain has a massive impact on the banking and finance sector. For an institution or sector that requires a lot of paperwork, authorization, and verification, blockchain has easily done all the tasks with efficiency and accuracy and obviously with lesser time consumption.
Financial institutions and banks are looking for ways through which blockchain can simplify the banking activities for their users, along with maximizing the benefits and limiting all the risks.
Last words on Blockchain in Banking
Blockchain technology will revolutionize the banking sector in the next few years. Financial institutions have already started to shift to blockchain for the features and advantages it provides.
Although building a banking application on the blockchain is a bit pricey, this investment will reduce all your future costs and workload. It will ease the work process and will consume less time providing you with improved customer satisfaction.
