Blockchain has taken over the financial world by a storm. Banks, stock markets and everything else is impacted by its advent. That’s simply because it facilitates features that the banking industry either can not, or wouldn’t for various reasons.
This includes faster payments, way cheaper transactions, better security, identity and transaction verification and so on.
Do know that when we say Blockchain technology, we do not mean “just Cryptocurrencies”. Cryptocurrencies do rely on the Blockchain but there’s so much more to the technology than just cryptocurrencies.
One of Blockchain’s biggest strengths is being a decentralized public ledger. That’s what we will discuss in the next few minutes.
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Faster payments without red tape
“Red Tape” is basically just the official formalities and documents that need to be signed before money can be moved.
With Blockchain, none of that is required. Blockchain payments are way faster than traditional banking payments. In most cases you’d only require the address of the other person. No additional approval or supervision is required.
Asset Tokenization is something else that’s revolutionary. You can convert any asset, be it digital (licences/photos/any other data) or physical (a building) into a token. The token can then be sold/shared or transferred within seconds. The ownership and transfer of ownership is 100% transparent, and undebatable adds massive ease to the whole banking process.
No geographical or institutional limits
Try sending money from your country, to any other country traditionally. The process is extremely frustrating regardless of which country you’re from.
With Blockchain, these man-made borders don’t matter. You can send money just as easily to your cousin next door, as well to your cousin in some third-world country million miles away.
Similarly, you do not have to approach a bank or a money-transfer company (e.g. Western Union) either. You can send money from one person to the other person directly. P2P access is one of the biggest ripples Blockchain has caused in the banking industry.
Exponentially cheaper fee
This is probably one of the biggest reasons why banks are scared of Blockchain and Cryptocurrencies in general.
Most banks charge a percent-based fee for transactions. And it’s “not cheap”. With Blockchain however, the fee is almost “free” (almost) for transactions. And this is regardless of the amount of the transaction.
Better security and transparency
Contrary to popular belief, Blockchain isn’t “anonymous” or “hidden behind a veil” as most consider it to be. Rather, it’s arguably the most transparent form of technology we’ve seen in the last century.
Everything stored on the blockchain, be it transactions, information or any other data is actually publicly available.
Anyone can verify and validate transactions. This naturally reduces the number of fake/fraud transactions and reduces doubts about their origin.
More accessible
Opening or maintaining a bank account isn’t exactly smooth. Yes, we all have one. But if you think about it, the amount of signatures, undertakings, disclaimers and documentation required isn’t exactly accessible. We tolerate it because it’s almost a basic human requirement.
However, Blockchain’s transparency and security has the capability to make the process much easier. Your information could be stored on the Blockchain and instantly accessed/shared with other parties when required. Moreover, as the reliance on other intermediaries (managers/ cashiers/or even the security guard) are reduced, the chances of incorrect or false data is naturally reduced.
Decentralization
One of the primary reasons why Blockchain is gaining momentum is its decentralized nature. No one owns the Blockchain and yet everyone contributes to it. In the simplest of terms, imagine this to be a synced notebook that all your friends own. Anyone can write anything in the notebook, and any change in any one notebook is instantly reflected in all the other notebooks. However, no one person has absolute control over all the notebooks at once.
No bank or body can one day wake up and say we will ban Blockchain because we want to. Of course, there are dozens of hurdles the government and banks may throw at it. However, universally, across the globe, it’s nearly impossible to control or regulate the Blockchain as one.
Conclusion- Here’s How the Blockchain Technology is Transforming the Future of Banking
I’m sure you’ve got an idea how and why Blockchain technology is one of the major catalysts for the banking industry today, haven’t you?
Now, there are advocates and enemies of the technology. Some want it implemented, others don’t. But that’s true for nearly everything on the planet, isn’t it?
I personally don’t think why a decentralized, transparent, cheap and secure technology should be opposed by anyone.
