Blockchain for Enterprise: Banking and Financial Services
Companies are only as good as the technology they’re powered by. This is certainly the case when it comes to money. Would you still choose to keep your savings in a bank account if you didn’t believe their cybersecurity was top-notch? Of course not. As individuals with unlimited choices, it is our right to expect only the best. But what happens when technological innovation moves faster than an entire industry can keep up with? This is precisely what we are seeing across a multitude of industries, all because of the birth of blockchain technology.
Blockchain technology has clearly exposed the vulnerabilities inherent to many of today’s systems. These legacy systems succeeded in creating greater efficiency for many years. However, they are no longer compatible with today’s world and will need to adapt if they do not want to become outright obsolete – this includes banking and the greater financial services industry.
Blockchain in finance
Banking has been around since the dawn of civilization. The industry has evolved tremendously over the decades in order to meet the demands of the new technologically-advanced world. The banks moved quickly to embrace the internet and mobile. And then came the non-brick and mortar banks like N26 and Revolut who realized the brick-and-mortar model was no longer a prerequisite for banking. As if that wasn’t enough of a threat to competition, blockchain technology came along with the promise of distributed ledgers and smart contracts to remove the need for third parties and a centralized system.
But the need to adapt is not new to banks which is why many have already realized that blockchain technology is here to stay. And those who realized they could use this novel technology to their own benefit will prevail as the winners of the new digital age.
Blockchain solutions for financial services
Blockchain technology holds promise for traditional banks for many ways. Let’s take transaction processing for example – this technology will help simplify and speed up transactions – both local and cross-border payments. Blockchain’s inherent distributed ledger system is ideal – it boasts much quicker processing time (a matter of seconds) and greater efficiency (automation and distribution removes the potential for human error), not to mention all of this at a fraction of the cost (nominal fees).
One of the most exciting features of blockchain technology is the distributed ledger and recording system. The system is self-regulating, in that only valid transactions are ever able to be recorded on the blockchain and can be done in a matter of seconds. This is what makes this technology so perfect for use by enterprises, especially in financial services.
Capital Markets also stand to benefit tremendously with the adoption of blockchain technology. This might be why Nasdaq announced last month that it has partnered with R3 to provide a platform for digital asset marketplaces on R3’s Corda blockchain. Nasdaq has integrated its Nasdaq Financial Framework with R3’s ledger technology. This might help lessen the complexity involved in trading assets.
Permissioned or private blockchains are most compatible with banks and other financial services institutions. This means that the blockchain will require authorized access and will follow appropriate regulatory procedures. Those who validate transactions on the blockchain will be pre-selected and trusted. So although a private blockchain is not fully open the way Bitcoin’s blockchain, for example, is, it still presents the same benefits of the technology.
Companies providing any level of financial services to customers will need to consider how they can implement blockchain technology solutions to incorporate the most cutting-edge technologies in their service-offerings. Fortunately, we’re here to help you. Blockchain Collective is a marketplace where innovation-savvy companies can find top talent to bring to life real solutions with blockchain technology. We match the industry’s top developers, system architects, consultants, product and project managers with startups and large companies who want to stay competitive in this new digital age. So fear not, we have you covered. Learn more about us and why we love what we do at blockchaincollective.co.