Banking
Blockchain will have transformative impact on a number of industries, but the biggest impact will be on the Banking and Financial Services (BFS) industry. The process of asset transfer and ownership is still inefficient, expensive and weak. Blockchain with its inherent nature of immutability, shared ledger and deterministic nature will help in designing better processes for asset transfer and authorization of asset ownership. This would reduce transaction costs, time and simplify existing processes.
 
Banking and Financial Services organizations are at the forefront in the experimentation of Blockchain. Although there is a lot of debate in the way Blockchain will disrupt different services, particularly on the magnitude at which it will impact and the speed at which it will happen, one common agreement across is that it will change the way business processes are delivered. The  BFS industry at least has come to terms that it is worth spending time, money and effort to understand Blockchain and the way it will unfold to impact the industry.
 
Applications of Blockchain in Banking and Financial Services:
1. Trade Finance: Trade finance is one of the use cases, which many Banks have started doing their pilots in. It is one of those use cases where tangible benefits can be visualized. Right now most of the banks are replicating processes as those for Letter of Credit for a customer on Blockchain. The full potential of trade finance will be utilized when organizations, shipment companies, banks and manufacturers start leveraging Blockchain technology along with the regulatory authorities. The network effects will have a huge impact going forward. 
 
2. Payments: The present system of payments is heavily dependent on messaging, which provides clarity at each step of the processing. With Blockchain the transactions will become transparent across the payment entities and the transaction lifecycle will become visible to the participants in the transaction. Smart Contracts could then be used to automate terms and conditions and provide visibility to reduce risk. International payments are mostly transforming incrementally and, although the transfer of money has been quicker comparatively, there is still tremendous scope for improvement in terms of efficiency and cost. With Blockchain many of the intermediaries could become unwanted; reconciliation will almost become real-time between the banks making the intermediaries unnecessary. 
 
3. Capital Markets: Blockchain with its distributed ledger will force companies to rethink the way they deliver value. Blockchain may not eliminate the intermediaries in capital markets completely, but it will definitely change their roles and force them to provide new solutions. When Blockchain is fully operational in the capital markets space, the entities which operate in them are going to take a different shape and form
 

 

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