Blockchain- A transformative technology in financial sector

by Finterra Technologies Software Consultancy Services

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.

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