This is one of the most debated topics right now and as far as the impacts are concerned, these are usually expressed in terms of security, real time, transparency, security, full life-cycle transaction history, cost efficiency and immutability. The financial sector is known to be the most important entity to be affected by blockchain.
A huge lot of Blockchain start-ups are focusing on the development of the solutions for financial sector, in terms of providing customers an access to crypto-currency-related financial services, digital asset holdings, minimising the complexity and number of intermediaries participating in existing transaction processes, better management of digital risk, formulating distributed ledger on the basis of options to regular financial services infrastructure and processes and bettering the ability to verify the past transactions.
The distributed ledger brings numerous particular differentiators:
- Near Real Time
These features can give the financial sector a number of potential advantages in the form of reduced risk of inflation or fall of currency as detached from country, efficiency of settlement process of transactions, operational effective gains through complete digitalisation of assets, minimal duplications of transaction required, no reversibility of transactions and improved audit-ability of transactions. The distributed ledger technology has the potential to reduce bank’s infrastructure costs that were incurred through cross-border payments, securities trading and the regulatory compliances and the technology can minimise fees for financial transactions, and can ease the process of audit trials.
Financial institutions are investing into the blockchain technology in a number of ways as they make an effort to incorporate the new technology and analyse the effect of it’s potential benefit on them, like setting an internal team, investing in the startup businesses, launching the start-up innovation hubs and accelerators and developing common initiatives. Even though we might not see the blockchain technology leading to a paradigm shift in soon enough, we will most likely notice a grasping interest in the technology underlying and its industry wide potential.