Blockchain technology holds great promise for the banking industry. But how will it change financial services for both banks and consumers?
Here’s what you need to know about blockchain technology and how it will affect the banking industry.
What are the Benefits of Blockchain for the Banking Industry?
The use of blockchain in banking offers multiple benefits for the financial services industry. These include…
Security
By decentralizing transactions, blockchain technology can reduce the threat of cyber attacks while also encouraging transparency between parties. Because the data is decentralized, encrypted, and cross-checked by the entire network, it is harder to attack or hack the blockchain.
Third Parties
Businesses can use blockchain technology to transmit and receive payments directly. As a result, companies won’t need a third-party payment gateway, which is a common practice today.
Reduced Costs
Peer-to-peer networks manage payments, which do not require centralized verification. This means that a small business can accept a blockchain settlement platform as payment and pay lower merchant processing fees.
Data Accuracy
The permanent records of blockchain technology also improve the accuracy of financial audits for both internal and external systems. As a result, accounting teams can automate their day-to-day procedures while still adhering to tight compliance and regulatory requirements.
What are the Issues with the Present-Day Banking System?
The increased interest in blockchain technology for the banking industry stems from its ability to solve challenges with the current system. These issues include…
- Manual processes that can introduce errors
- Regulatory compliance requires data correlation from multiple sources
- Financial institution structure that makes changes difficult
- Increasing customer expectations, particularly related to technological capabilities and user experience
- Customer retention in the face of increased competition
- Outdated mobile and online banking capabilities
- Security breaches
- Reluctance to fully embrace cloud computing services
Have questions about blockchain app development for the banking and financial services industry? Contact the blockchain experts at InApp to learn more about how our cutting-edge solutions can help you get ahead of this technology revolution.
Frequently Asked Questions
What is Blockchain Technology?
Blockchain technology stores transactional records (i.e., the block) of the public in several databases (i.e., the chain) via a distributed ledger connected through peer-to-peer nodes. Every transaction in this ledger is authorized by the digital signature of the owner, which authenticates the transaction and safeguards it from tampering.
That capability can offer benefits to companies in a wide range of industries, particularly banking and financial services.
