To develop new business
opportunities, financial services institutions need to adopt technologies which
simplify, automate and accelerate innovation. And Blockchain seems to bring a
revolutionary change in the way financial transactions are carried out. Though,
it will take time for financial institutions to realize the benefits this
technology comes with. There are five areas of financial services for which
centers need to embrace blockchain and win over the market such as:
Clearance
and settlement in financial sector
At present, the settlement
process depending on asset class is often costly and slow. In fact, it takes
nearly two days or longer to process through several intermediaries. Thanks to
blockchain technology, it can create a single source of truth. And tracking
asset ownership on a shared record helps to cut down on reconciliation costs
spent otherwise. Such kind of cost savings and added efficiencies makes them more
focused and leaner.
Smart
contracts and Blockchain
Basically, a smart contract
is a computer program or protocol which facilitates, verifies or executes the
terms of a contract. These contracts can be utilized for a wide array of
financial documents such as investments, insurance policies, bank accounts,
credit histories, tax filings, income statements and much more. As you all
know, smart contracts use software code to get the task done automatically so
it obviously increases the speed of business processes. Not only this, the
decentralized system between all permitted parties also leaves no space for
manipulation, non-performance or error because execution is managed automatically
by network instead of an individual person. As a whole, it helps you save
money, time and conflict.
Money
transfer and Blockchain
When it comes to money
transfer issues, blockchain has come to the rescue. It reduces the transfer
processing time in regard of ACH, limited money distribution methods and
exorbitant processing fees. Today, even the unbanked population prefers to own
smartphone and can make use of blockchain to send funds instantly anyone
through mobile device.
Lending
and Blockchain
Blockchain render remarkable
visibility into lending environments. For instance, Digital ID through
blockchain could contain borrower’s mortgage history, outstanding balances,
credit score and income etc. Especially during loan application, the unique ID
can be used at multiple lenders. It can also be utilized for cross-checking
with credit agencies and for employment verification where blockchain
technology plays a vital role in boosting up processing time.
No
duplication of records
The opportunity of having
access to one shared record can reduce the duplication of records between
regulators and financial institutions. It can turn out to be industry-wide cost
saving. And Blockchain technology is there to simplify and streamline process
with KYC. There is no need to rely upon a third party by trusting the network
agreed dataset. The digital efficiency, distributed nature and improved
security with this technology makes it the credible source of truth for KYC and
other identity related issues.
So, blockchain has the
potential to overcome traditional hurdles in financial services and eliminate
friction from the value chain.
A multi-national start-up
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