The potential of Blockchain technology has been out in the open for a long time now. It has acted as a significant innovation in monetary payments, maintenance of large amounts of data, or dealing with intellectual property. The financial services industry is nothing less than lag. Professionals within this sphere were doing the rounds of talking about how blockchain technology could soon impact financial management, and that day is not far away. Let us see why we say so! Here are a few quick statistics about what is there for the road.
- A recent survey conducted by IBM states that a whopping 91% of banks are switching to invest in blockchain technology from their regular banking set up to carry out operations.
- As high as 66% of institutions are already expected to function at a significant scale with blockchain technology.
- 45% of financial sectors facing cybercrime can be checked with the introduction of blockchain in their daily operations. The sectors include stock exchanges, payment networks, and currency transfer services.
These figures hint us about blockchain being the biggest accelerator for the fundamental transformation of the banking sector, stock market, insurance, and asset management, benefiting both customers and financial institutions.
A brief introduction to the blockchain technology
Blockchain is nothing but a ledger of numerous transactions on the internet that is accessible to all. These transactions are chained in a peer-to-peer network, where legitimate participants can trace back any record from an existing one in that same network. Like the internet itself, it has no central authority that overlooks the activities in a network. The data blocks in the blockchain hold all the records of transactions. People can verify the legitimacy of a transaction but cannot go right at it as these ledgers full of data are highly secured by advanced cryptography.
How is Blockchain effective in financial management?
The first thing that pops in our mind when we see ‘blockchain’ is Bitcoin, the first-ever cryptocurrency under blockchain technology. But a lot has changed since then, and important financial institutions have begun to think beyond Bitcoin to ensure efficacy and security in their transactions. Blockchain is a digital ledger. It is added on all the ledger copies and is further verified by participants whenever a transaction is initiated. An accurate record of transactions, the most critical head under any financial services, is always maintained with the help of blockchain.
There are so many ledger copies making it impossible for cybercriminals to falsify or alter any data. Transactions are only complete whenever fellow participants of a network legitimize them. Thus, the hacker would have only one option left – simultaneously changing every copy of the ledger, which is practically challenging.
Boons of Blockchain technology in financial management
Verification of digital ID
Blockchain-enabled IDs are essentially becoming speedy modes of verification for banks. When a customer’s information is secured, institutions can up the public trust and also at the same time look for frauds and theft.
Stock market settlements made quicker.
Many stock exchanges test the potential of blockchain to carry out stock settlements immediately without long transaction time and high operational cost.
Cross-border transactions made easy
Transacting money through borders is no more expensive and hectic as blockchain cuts down the international transaction fees and transacts currency accurately and faster without going through several banks.
Calculation of credit scores
Credit reports are impactful as far as a person’s financial life is concerned. Blockchain-based reporting is more fruitful than the traditional server-based one, as the former is more secure.
Efficient and transparent payments
Payments from one bank to another earlier used to take up weeks. Digital currencies flow instantly without the interference of any third party, making it more convenient for customers, any time. The ledger also helps to maintain utmost transparency and a fraud-free culture.
The Bitcoin Code is a platform to find out more about Blockchain in financial management.
It is now evident that the features of blockchain technology go exceptionally well with financial management, and it has indeed revolutionized the global finance scene making it more secure and efficient than ever.
Featured Image by Gerd Altmann from Pixabay