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Global Economy Insights: The Potentials of Blockchain Technology Application in Financial Institutions

Global Economy Insights: The Potentials of Blockchain Technology Application in Financial Institutions image

Since the rise of the blockchain, people, businesses and industries discovered the many benefits and uses of blockchain technology when integrated into their system. Other than cryptocurrencies, blockchain can be used in many purposes as well.

The blockchain technology allows businesses and industries to improve their overall operation. Blockchain helps the industries to create a more efficient, safe and secure system. Many businesses in different industries are already trusting and adding blockchain to their systems.

Among the businesses that will benefit the most are the ones in the financial industries and institutions. The current business models and systems are expensive, slow and often experiencing service disruptions and difficulties. The blockchain technology is a game-changer which will bring competitive advantages to the overall process and success of the financial industry.

Security and Transparency

The current business model and the system have many issues, especially in security. With blockchain’s built-in structure, it’s able to protect data records, transactions and allows the industry to better manage their process. It has the capacity to solve a lot of problems and issues with the finance industry. Unlike the traditional system where everything is stored in a single network or storage, blockchain is breaking everything into pieces and disseminating them to different servers or network which adds cybersecurity protection. It has the ability to secure all the records, information and especially money on a cheaper value.

Imagine if a bank which has a centralized system got hacked ‒ they will get every single information easily because the information is all stored in one location. Also, if they do a system upgrade, the entire service will be down until it’s done.

Transparency, low cost, and reliability are some of the many advantages of the blockchain. The current business model involves a lot of manual processes and third parties which makes it slow and expensive. The manual process increases errors and with a high risk for fraud and corruption. With the blockchain technology, people will enjoy the transparency, faster processes, and more accurate information while consuming less money for fees.

Efficiency

Unlike the traditional database, the blockchain system will help improve maintaining all the financial records in sync. The traditional system needs multiple solutions from different services so they can maintain all the transaction records in sync. They need to develop their custom security precautions and protocols ‒ making it expensive for the company and for the customers as well. Right now, the more security and feature a company offers, the more expensive it would be. However, people still opt for their service because they need security.  

In the blockchain system, once you enter a piece of piece information, it can’t be tamper. It is very important in the financial industry and customers. With blockchain, all the transactions will be safer, faster and cheaper. It will also be great for the customers and will increase your customer's loyalty.

Lesser Cost on Transactions

In the traditional centralized system, if you need to send money internationally, it’s either you go to a bank or use a third party. Either way, you need to pay the transaction fees. If you’re going to buy something internationally, you need to pay it via credit card or a third party payment option. Again, you will need to pay transaction fees.

Banks and third-party applications charge expensive amount in able to process the transaction. Sometimes, you don’t know what the charges are for. In some services, they have hidden fees that are really questionable. But because their customer service is not good, you will end up letting it go. Some services promise transparency but they’re not doing it at all. Often times, the receiver will only be the one to receive deductions. But sometimes, both parties do without them knowing it. These are some of the problems that blockchain can solve.

Blockchain allows people to directly transact with each other, cutting out the middleman. Thus, the overall transactions cost with be lesser.

Final Thoughts

There are many potential applications of blockchain. The security it offers beats any current application and companies. The blockchain application has been started and the results are great so far. Because of the security and transparency it offers, issues like fraud, scam or any issues involving money will be lessened. Corruption will be reduced as well.

The research is still ongoing on what are the other potential applications of blockchain. There are many global benefits that it offers which we can take advantage of. One thing is for sure, it can make the current business model better and many will benefit from it.

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