Companies may utilise blockchain in a variety of critical areas, including financial software and systems. Many public-sector banks are hesitant to openly explore possible blockchain applications, but a number of finance and fintech startups have initiated preparations to incorporate blockchain in finance and banking. Indian financial organisations and fintech companies are rushing to get their hands on blockchain technology, be it private entities or public, and blockchain has become one of the major trends for start-ups. Blockchain has brought tangible changes in the finance industry and the investor base is becoming more and more aware of the various benefits of blockchain. Firms that are using blockchain have an advantage even while advertising their business as blockchain is a highly sought-after technology at the moment. To find more tips on advertising, click here. These are the most significant ways in which blockchain is transforming finance.
List of uses of Blockchain in the finance industry:-
1. Payments
The significant discrepancy between norms and regulations, IT systems, and banks from country to country is why international transfers stand to benefit from using blockchain in finance. While local payments can be completed in minutes to hours, cross-border transfers might take several days or more. The use of blockchain in the finance industry has the potential to be utilised for both domestic and international financial transactions and such a move has the potential to benefit them immensely on a global scale.
This is due to the banks’ requirement to ensure that they comply with all applicable rules. Inadequate infrastructure also poses a security risk for many transactions, as these systems are more vulnerable to cyber-attacks. These assaults have the potential to interrupt transactions and potentially divert cash to a third-party account.
2. Remittances
The fact of how much of a developing country’s total GDP is due to remittances is rather startling. Banks have a great opportunity to generate substantial sums of money by processing both small and big-scale remittances. Because these transactions are used by both individuals and businesses, even a tiny transaction charge of a few per cent may result in a significant revenue stream. It is important to emphasise that a thriving GDP would benefit everyone collectively, and more focus will be drawn to the success of blockchain in the finance industry.
A handful of firms are already providing blockchain-based international transfer services. Transactions are safe and cannot be tampered with since they are peer-to-peer and encrypted. The assimilation of blockchain in finance has the added advantage of magnifying the amount contributed to the GDP by remittances. The hope is that blockchain will slowly but effectively replace orthodox financial systems and procedures and using ECS would become a lot easier.
3. Payment gateways
A recent successful company raised awareness of how blockchain may be utilised to provide next-generation payment systems. With a blockchain card and mobile wallet, the firm hoped to connect merchants and customers. While the idea of blockchain in finance has existed for a long time, today’s firms are choosing to utilise digital tokens to ease the movement of money as well as to integrate a payment gateway facility. This has produced a lot of interest in blockchain technology.
The blockchain business model, which is part of the “FinTech revolution,” eliminates the need for the traditional processing of payments. Transactions are also safer and more secure seeing as customers may use cryptocurrency tokens to pay for products and services in whichever way they choose. This is where utilising decentralised blockchain in finance comes in handy.
Whether they like it or not, technologies like this will compel banks to make a significant transition from traditional computer systems to blockchain-based payment gateways. Banks will need to make a move soon since traditional payment systems are also less secure.
4. Trade & finance
Following the implementation of blockchain in finance, the financial services industry will benefit greatly from the automation of transactions vital to trade finance. The use of smart contracts to automate approval procedures and clearing calculations will cut processing times while also allowing banks to significantly reduce the number of people required for this activity.
Blockchain in finance will assist the banks by reducing the number of errors caused by human error. Not only that, but companies will feel incentivised to use blockchain for the simple reason that markets are constantly changing. Time is of the utmost essence and using blockchain can potentially change how people engage with the stock market.
5. Improved record keeping
Trillions of bank records exist in the worldwide financial industry, ranging from personal account data to stock market transactions, and ledgers that record stock purchases. The process of clearing and settlement done by investment banks is a wonderful illustration of where blockchain in finance may significantly enhance present processes. Because banks must record information on all loans and securities on their records, a large number of transactions must be documented swiftly and securely. The vast majority of these transactions may be recorded using digital blockchain ledgers, which are not only immutable but also prevent fraud.
Furthermore, the decentralised structure of the transactions would provide banks with greater control over the records. Because the other parties engaged in the transaction obtain a record as well, arguments about missing or inaccurate transactions would be a thing of the past. Fintech businesses in the United States and Australia are rushing to use blockchain in finance to enhance their sluggish and frequently out-of-date systems. Without having to maintain a paper trail, the logistics team can work wonders and devote time to its other functions. To know more about logistics, click here.
6. Identity verification
Blockchain in finance has the potential to help banks finally solve a problem that has plagued them for years. Banks are responsible for confirming the identity of their customers, especially during B2B transactions. These restrictions are in almost every country across the world and are intended to assist in preventing fraud and money laundering.
Blockchain’s cryptographic security, which needs a security key to access it, ensures that all parties engaged in a transaction are explicitly known to the ledger. This feature is crucial to all financial transactions since identification is needed by law. This eliminates the need for a separate system of identity verification every time a large-scale transaction takes place.
Several firms are already working diligently to assimilate blockchain in finance so that it can aid banks and other financial institutions in verifying identities in a quick and reliable manner.
You now have a solid idea of the many applications of blockchain in the finance industry. It all depends on how successfully you can integrate it into your current marketing initiatives. Depending on your organisation, you may require a complete overhaul or simply a few minor changes to your marketing strategy.
