Blockchain in Banking Industry
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What is Blockchain?
Blockchain Technology•
A blockchain which was formerly known as Block Chain is a
list in which records are present in a growing nature known
as blocks. These blocks are interlinked and each of them
contains a cryptographic hash that is of the previous block
connected to it. This hash is the key or password, a
timestamp and transaction data is recorded in it.
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As per Don and Alex Tapscott, the authors of the Blockchain
Revolution(2016), blockchain is defined as the “incorruptible
digital ledger of economic transactions that can be
programmed t record not just financial transactions but
virtually everything of value”.
•
Blockchain, in short, is a shared ledger decentralized and
resistant to tampering which provides access to the verified
contributors to store, view, and share the digital information
in a secured environment.
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•
The development of the internet might get compared as of that to the blockchain. The internet as it is has
always been a boon factor for everything, be it a business or the whole market of social media and
transactions. It has reshaped the lifestyle and businesses since the 1990s.
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The blockchain, on the other hand, is also one such factor which takes reshape the whole perspective of
the nature of business.
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Not just this, it provides trust, accountability, and transparency when it comes to business relations for
providing the aiding benefits. These benefits are adopted by companies and businesses, especially the
banking sector to explore its ways of preventing fraud and gaining security.
Adoption of blockchain technology:
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Blockchain technology has yet not been leveraged by the whole market, but those who use it have claimed
the businesses to be a success after its adoption.
•
Blockchain takes the work further ahead of the previous and old formulas, driving the data and work
forward with vigour.
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Common Benefits of Blockchain:
•It is the biggest provider of solutions related to trust.
It prevents corruption of data in an agreed chain
transaction.
•It solves the issues of double-spending (a single
transaction cannot get recorded twice).
Prevents corruption
of data
Blockchain
benefits
•Blockchain eliminated the need for intermediaries.
•Provides a frictionless transaction.
Prevent Double
Spending
Frictionless
transaction
Eliminate
Intermediaries
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Learn how Blockchain benefits businesses and
transactions in the banking industry:
•
Blockchain acts as a game-changer for the banking industry, it not only prevents the frauds
from happening by providing its high level of security, but it also allows them to perform and
approve transactions in a matter of seconds.
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Blockchain provides cutting cost majorly and boosting the efficiency of the banking sector. The
smooth transaction is the added bonus provided by blockchain to the banking industry.
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If each bank in the network had the copy of the ledger and a common protocol and consensus
mechanism, it can benefit all the plus properties of the blockchain.
•
In short, Blockchain in banking sector offers lower costs, security, privacy, and speed.
Blockchain provides profitability to the banking industry.
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Ways in Which Blockchain prevents frauds in the Banking Indstry
Immutable
•The data or transaction once registered on the blockchain can not
be edited or changed in any way possible. The consensus is a term
that provides the allowance and permits the validity of the data to
be true and of required nature before the data is even listed on the
blockchain to send forward. All the participants or respondents
provide their consent before a data is set and transferred in the
blockchain.
•After the approval of the data, the block is provided with a
timestamp before which is linked or connected to the previous block
in the blockchain.
•This process makes the blockchain data of consent and an asset
from the very beginning. It can procure the data in terms of origin
making it of protective nature which can not be undone however
strong the fraudulent is of skills.
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Distributed Networks
•
The blockchain includes a distributed digital ledger containing the
data shared between systems and given consent on a regular
basis. The central authority in this is missing and the data is sent
forward with the consent ot everyone present in the members.
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The management and authorization of the data that is forwarded
is transparent leaving not even a single place for fraud. It is under
the authority of the members to process, check, and verify from
start to end.
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This is not just the case of the current data being transferred or
forwarded, but the data present in history also falls on the hands
of the members. So, the changes to be done on the data needs to
have access to the data and the access to the majority of the
systems in the network is the toughest task and is considered as
“out of the picture” question.
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Permissible
•
A blockchain network is created on the base of the allowances
and permits and non-permits depending on the type of
blockchain creation.
•
The permission-based network of blockchain is one such
network which prevents the frauds to occur as the data is
completely under the control of the members present in
making and moving the data. This even prevents the access of
the systems present in the network and is also known as the
private blockchain.
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Types of Frauds
Identity Frauds
•Considered as one of the serious and impactful issues,
identity fraud poses a threat to consumers across the globe.
Blockchain provides the security of the digital ID of an
individual that makes it protective in nature without any
proof of tampering.
•As to the identification of the data is considered, it is kept in
a permission-needed framework which only the authorized
parties can access. In such situations, the authorized
members can access a single version of the
information/data and the verification of the data can be
provided only the known members providing safety and
validity to the data and its security.
-
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Financial Frauds
•The blockchain provides prevention against the financial frauds by providing a complex
outlook to the transactions that are not easy in numbers either. The processes that
make the transactions complex in nature are the need for settlements, difference in
currency denominations, collateral requirements, etc.
•The processes that are multi-staged in nature requires human interaction which makes
it more difficult to break or alter. In such cases, blockchain helps in detection of frauds
by enabling the sharing of information in real-time and providing updates ledger on the
consent of the members in the party. These steps not only prevent frauds from
happening but also puts the identity of the fraudulent on stake. Not just this, it even
lowers the costs and time taken.
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The Supply Chain Frauds
•The supply chain networks are complex with huge
number of people involved in the process and
blockchain helps in preventing the fraud by providing
transparent and easily traceable products.
•Any process cannot be hindered without the
verification and updates as approved by the members
of the party. The digital adoption in blockchain provides
tracing the products to the very origin.
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Blockchain as a tool for financial and Banking Sector
•
A blockchain is a tool that works as an asset in preventing
frauds to happen in the financial and banking sector. It
provides high-level pf security and a complex transaction
and number of users in order to make it difficult to alter or
manipulate.
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When the banking sector is on its hinges after various
frauds and tamperings, it simply protects the core
technology or transaction od any important data or
information.
•
Blockchain provides lower costs, less time in transactions,
and smooth transaction with high security to the banking
industry by protecting it against frauds and threats.
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•
The cost reductions bank would gain after the adoption of
blockchain’s estimated by using the data used from McLagen’s
research and surveying a number of investments banks. It
presents the potential savings as the following-
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70% of savings would be done on central finance reporting, as a
result of better efficiency, transparency, control, and data quality.
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50% savings would be there on business operations (trade
support, middle offices, clearance, and settlements, etc)
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50% savings are to done on centralized operations (KYC, Client
Onboarding), as a result of better data quality and mutual
consent strategy of data among the members of the party..
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30% to 50% of savings on compliance as a result of enhanced
transparency and auditability.
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All in all, from the cost base of $30 billion savings, investments
banks would be able to save $8 billion correspondings to a total
of 27% of cost reduction.
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About US
•
High Beam Global is a full-service Market Research Firm in India, dedicated
to delivering quality performance by matching the right need with the correct
solution. We partner with clients in all sectors and regions to offer worldclass data collection, reporting, and analytics solutions.
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approach with robust project management to offer a unique experience to its
clients. With our rich experience in industries like Healthcare, Information
Technology, and Industrial Products (to name a few), High Beam Global
helps its clients to provide quality insights on targeted and potential markets,
brand health, consumer preferences, and other market dynamics.
•
After delivering over 800 successful projects in the last 9 years, High Beam
Global has emerged as a strong and reliable partner for companies ranging
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