Financial firms embrace Blockchain technology due to its intrinsic efficiency in tackling secured, transparent, and cost-efficient transactions.
As per a recent report by The Business Research Company, “Blockchain In Banking And Financial Services Global Market Report 2023“, the influence of Blockchain in the financial services market is anticipated to grow to $19.27 billion in 2027 at a CAGR of 58.3%. Here are a few ways how Blockchain influences financial services.
Allows Efficient Payments
Blockchain technology improves payment transparency, efficiency, trust, and security. At the same time, it also minimizes the cost for financial service firms and their users. Payments from one bank to another could take up to a week to get processed, and payments under the influence of Blockchain can get transferred instantly.
Similarly, Distributed Ledger Technology (DLT) allows users to make payments faster, cheaper, and more conveniently.
Blockchain retains time, money, and resources for all the parties involved reducing the requirement of middle-office and back-office staff with instant settling payments. The DLT can become the best way to enable faster and cheaper payments with the help of a synchronized Blockchain process and optimized operations.
Enhances the Compliance Process
Know your customer (KYC) is crucial for all financial institutions worldwide as they are responsible for complying with and reporting on various requirements from the local regulators. This a highly time staking, labor dependent, and open to errors. KYC-chain, a Blockchain service, helps financial firms to align the information and streamline the KYC process accordingly. At the same time, Blockchain provides KYC updates to the banks in a real-time and efficient manner reducing the duplication of data and minimizing workload. Additionally, it automates customer identification through a single digital source ID, allowing a seamless exchange of digital documents between banks and other related sources. Therefore, resulting in account automation retaining the privacy of data.
Offers Fraud-free Claim Management
Blockchain benefits the insurance industry by automating the process of claim sorting through smart contracts. There are numerous steps to sorting client settlements, therefore, a simple approach to customers’ transactional history, and a centralized pool of customer authentication, enhance the claim settlement process and make it fraud-free. In a manual claim, settlement involves a long communication involving validating the information and duplicity of tasks making it a tedious and costly process. Blockchain allows parties to be linked to each other via a shared and secured network and collaborate in a manner that reduces inefficiency and streamlines the entire end-to-end process, ensuring efficiency.
Better Asset Management
The asset management and supply chain network focus on a centralized digital system providing real-time visibility of assets within the systems, creating a distributed ledger system network. Blockchain-based DLT enables direct trading and settlements across boundaries, reducing cost and increasing data accuracy with minimal process delays.This makes the system cautious towards any trading errors, cyber fraud, or misinterpretation during the exchange of assets between multiple parties.
Also Read: How Big Data is Changing the Way Banking and Financial Organizations Operate
Improves Transparency and Security
Because users perform activities on a public ledger, Blockchain can make the financial industry more transparent. This transparency can expose inefficiencies such as fraud, resulting in problem-solving that can lower risk for financial institutions. At the same time, payments and money transfers made on the Blockchain are faster and more traceable than in traditional banking. When information flows through numerous financial mediums, there is a risk of interception of that information. This threat can be mitigated with Blockchain’s cryptographic algorithms bringing security to the exchange of information between parties.
Blockchain technology is crucial in the transformation of financial services as it can manage transactions of information by securing them as they occur with lower costs and robust efficiency. Blockchain is an umbrella for applications that can be integrated into different industries, providing investors with many opportunities.
