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Blockchain technology has started revolutionizing the financial industry with its smart functionalities and security from malicious cyberattacks. Multiple banks have initiated to adopt blockchain to attract potential rich investors with valuable assets across the world. Banks and other financial institutes do not want to be left behind in this cutting-edge tech-driven world. They need to level up their game to compete with the trending cryptocurrency market. Some global banks have already started launching smart tokens and access to high-end rich clients using blockchain technology. Blockchain technology in banking is expected to hit US$13,946 million in 2026 with a CAGR of 51.4%. Let's explore some of the ways in which blockchain technology is disrupting the banking sector in 2021.
Blockchain technology is disrupting the banking sector worldwide in six ways
Stock trading in the traditional banking system is a time-consuming process for investors in this fast-paced life. The transactions need to pass through a number of intermediaries or agents. The traditional system holds a high risk of cyberattack from malicious hackers. But the implementation of blockchain has reduced the number of agents in the stock trading process. The stock regulations can be easily coded into smart contracts that do not provide any access to third-part.
Blockchain technology is revolutionizing the banking sector by helping in complying data with multiple regulations like KYC or Anti-Money Laundering efficiently. The traditional system of sanctioning a syndicated loan is highly time-consuming. But with the implementation of blockchain, banks can easily comply enormous volumes of data with international as well as national regulations. It also helps to prevent unnecessary duplication of data for easy access to banks.
Trade finance involves an immense load of time-consuming paperwork, for international trade and commerce activities with each trade. Agents prepare all the paperwork and documentation to update the private ledger on a computer or paper for every international finance trade. The integration of blockchain in the banking system can reduce the time taken for updating all kinds of essential information on a computer system without any potential mistakes in the process. The parties can directly maintain and view a single ledger without any intermediary or agent.
Banks and other financial institutes have certain loyalty programs and points for customer retention for the long term. Blockchain technology helps these banks to track and analyze these extra-curriculum programs to make smart decisions for better customer engagement. Blockchain also helps in the sign-up process to make the process smoothly without any human intervention.
Banks have started facilitating blockchain technology in payments that are highly profitable as well as take lower transaction fees than the traditional system. It has enhanced the flow of international payments among investors in these recent years. Some banks are also using blockchain for better B2B payments in developing countries.
Blockchain technology allows multiple transactions to be cleared and settled directly on a public blockchain within a few seconds, which the traditional system takes around 3-4 days to complete. It helps to keep track of all transactions with a confidential conversation between two parties. Blockchain can provide one simple bank transfer to reduce the average cost of clearance and settlements of international transactions.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
