Blockchain has been a buzzword for the past few years and it’s really no surprise given how it’s changing the dynamic of many industries. Blockchain technology is expected to revolutionise the way we do business, not only in the banking industry but across sectors such as healthcare, government, retail and more. In essence, a blockchain is a distributed ledger of records or public databases that are openly shared among disparate users and that creates an unchangeable record of their transactions. These transactions are cryptographically secured to ensure they remain tamper-proof. Blockchain has great potential to overhaul the way the banking industry works and make it more transparent, efficient, secure and cost-effective.
Blockchain allows people to trade directly with each other, using a record of transactions kept in a shared ledger. This eliminates the need for middlemen, like stock exchanges and banks. >, Blockchain can be used for anything from voting to business contracts. It is a recording system that has no centralized authority, which makes it practically impossible to hack into and tamper with. The information kept in a blockchain system is shared across a vast Network of computers, and the data cannot be altered unless the majority of computers in the network agree that it should be changed.
Blockchain technology has a lot of potential in service of the efficient utilization of capital.
Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.
— Vitalik Buterin
Here are several ways blockchain technology will change the future of the banking system:
- By Expediting International Transfers.
- By Increasing Security & Reducing Fraud.
- By Reducing Costs for Banks and Customers.
- By Making Lending Easier for Lenders and Borrowers.
Blockchain technology is slowly but surely making its way to the banking and financial services industry. It is also capable of transforming the overall security of the banking sector. From remittances to securities trading to cross-border payments, blockchain technology is poised to make a huge impact on the way international transactions are carried out and digital assets are kept secure.
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With blockchain technology, lending will gradually become easier as there will be instant settlement of transactions. This can help in avoiding problems such as double spending and defaulting. Blockchain can also reduce the time taken to open a bank account from days to minutes.