What problems will blockchain technology solve for the banking industry?

by Anii Jain Human resource executive

The following years proved to be a difficult challenge, particularly in the US, due to the housing market. People suffered evictions, foreclosures and an exorbitant amount of job losses. On top of this, key businesses failed and consumer wealth declined by trillions of US dollars. In 2009 it was reported on BBC News that £815bn was knocked off the wealth of households which amounted to an average of nearly £31,000 for every household in the UK. The effects are still felt to this day as in 2017 it was reported on Business Insider that “average incomes in Britain would be 20% higher now than they were…..instead, they are only about 5% higher.”

On 1st of November 2008 an unknown individual(s) called Satoshi Nakamoto released the technical paper for Bitcoin — a peer to peer electronic cash system that wouldn’t need a 3rd party intervention from a financial institution.

Fast forward eleven years later and one Bitcoin is currently valued at $3,600.

Although banks have been largely resistant to Bitcoin, they are very interested in the underlying Blockchain technology and the impact it could have on the financial industry. Perhaps the most evident up until this week has been Barclays as in 2018 they filed for Blockchain patents.

However, the entire landscape of Cryptocurrency has now been forever altered as JP Morgan are the first movers in creating their own “Stablecoin” digital currency. Some economists have gone as far as to say that central bank digital currencies will ultimately destroy Bitcoin.

This system was designed to be completely decentralised meaning that users would not need to put their trust in a centralised authority i.e a central bank.

the key areas of the finance industry that can be improved by Blockchain technology

Security

Accessibility

Auditing

Know Your Customer (KYC)

Moreover, some of the organizations are also investing heavily in such researches and tests conducted by startups to develop blockchain-based solutions. With Blockchain entering the current scenario, a lot of problems could be solved while making the system more transparent, easy to access and reliable.