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Blockchain Application in Banking Industry: A Mini-Review
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Blockchain Application in Banking Industry: A Mini-Review
Salah Albeshr
Abu Dhabi University, Email: 1074352@students.adu.ac.ae
Haitham Nobanee
Abu Dhabi University, Email: haitham.nobanee@adu.ac.ae
Abstract
Briefly, Block-chain technology is a technology in which digital information is stored in a public
shared data-base. This technology got famous mainly after introducing the first cryptocurrency
which is the Bitcoin. The bitcoin uses this technology in keep tracking the records securely. First,
this paper will give a brief idea about blockchain generally and show how it works. Then, it will
discuss some general applications of blockchain. In addition to making a mini-review of this
technology generally and especially in the banking industry. Like other services and products,
which have been completely changed because of “digitalization and technology”, such as;
shopping, ordering and delivering food, movies and TV industry, navigation services… etc.
Blockchain can completely change and transform the banking services because it has High
security, high transaction transparency, decentralized system and can achieve transactions more
efficiently. In addition, the correlation between blockchain technology, Fin-Techs and
sustainability will be discussed. Finally, the expected future and the challenges of accepting and
implementing blockchain technology in the financial industry and services will be discussed.
Introduction
When I started searching for the blockchain technology definition, I found more than one source
mentioning that: “blockchain is a distributed, decentralized, public ledger."(Reiff Nathan, 2020)
The word (Blockchain) consists of two parts, the blocks: means the digital data and the chain:
which means all the digital data are interconnected like a chain. In other simple words, it is the
digitalized record-keeping technology which uses a public database to keep that record. One of the
main reasons which made this technology very famous is the fact that; blockchain is the
fundamental technology which is used for cryptocurrency. Other names for the cryptocurrencies
are digital currencies and virtual currencies.
Figure 1: Blockchain structure with example of the Bitcoin
Taken from: Reiff Nathan (February 2020). Blockchain Explained. Retrieved From https://www.investopedia.com/terms/b/blockchain.asp.
Bitcoin is the first cryptocurrency, which used the blockchain technology. Bitcoin is a virtual
currency that works without central governance that can be transferred a person to another on
the bitcoin network without the need for intermediaries. Bitcoin was first introduced in 2008,
immediately after the global financial crises. The bitcoin creator is “Satoshi Nakamoto”. But,
nobody literally knows who “Satoshi Nakamoto” is. Is he a person? Organization or even
corporation? No confirmed information. This considered one of the points which were taken
against this virtual currency. One of the main reasons for bitcoin creation was the financial crises
itself, which showed weakness in some trusted banking systems worldwide! A second major
reason for creating the bitcoin was to facilitate cheaper international money transfer. But
unfortunately, the bitcoin took a different direction than what it was designed for. Briefly, the
bitcoin heavily used in money laundering and in black-market transactions. Because of that, some
governments were against bitcoin.
It worth to mention that many people mix between bitcoin and the blockchain. To clarify the
difference, the bitcoin is a currency, a digital one, which utilizes the blockchain knowledge. But
the blockchain technology is much wider than a digital currency. The blockchain technology can
support many industries and can be used in many more applications. This technology has a high
potential to be used in the financial and banking industry.
Methodology
This Mini-Review paper is mainly about Blockchain and its applications in the banks' industry. To
start with this topic, I began the paper with a brief introduction explaining the meaning of
blockchain technology and its history. Then, in order to obtain good resources for this paper, I
searched my topic in Scopus through E-Journals. Most articles in SCOPUS had no impact factor
score because the topic relatively considered new. table 1 (below) sort articles according to Scopus
Impact Factor (IF). There is a big potential for the blockchain technology to be used in Fintech
and sustainability. So, some Fin-Tech and sustainability articles were studied and added to this
mini-review paper. Table-2 will summarize the main objectives of each paper, its findings and
recommendations.
Table 1. Journal and Publisher Distribution
Article Name
Author(s)
Journal
Publisher
Year
1
Understanding
modern
banking ledgers through
blockchain
technologies:
Future
of
transaction
processing and smart contracts
on the internet of money
Peters, G.W.,
Panayi, E.
New
Economic
Windows
pp. 239-278
SpringerVerlag Italia
s.r.l.
2016
Scopus
IF
25.19
2
Blockchain application and
outlook in the banking
industry
Guo,
Liang, C.
Financial
Innovation
2(1),24
SpringerOpen
2016
9.51
3
Blockchain
Technology:
Transforming
Libertarian
Cryptocurrency Dreams to
Finance and Banking Realities
Eyal, I.
Computer
50(9),8048646,
pp. 38-49
MDPI AG
2017
8.64
4
Research of a possibility of
using blockchain technology
without tokens to protect
banking transactions
Popova, N.A.,
Butakova,
N.G.
Proceedings of the
2019 IEEE
Institute
of
Electrical and
Electronics
Engineers Inc.
2019
6.52
5
Exploration and practice of
inter-bank application based
on blockchain
Wu, T., Liang,
X.
ICCSE 2017 12th International
Conference
on
Computer Science
and
Education
8085492, pp. 219224
Institute
of
Electrical and
Electronics
Engineers Inc.
2017
6.23
6
Multi-blockchain model for
central bank digital currency
Sun, H., Mao,
H., Bai, X.,
(...), Hu, K.,
Yu, W.
Parallel
and
Distributed
Computing,
Applications and
Technologies
IEEE
Computer
Society
2018
5.15
7
Banking on blockchain: Costs
savings
thanks
to
the
blockchain technology
Cocco,
L.,
Pinna,
A.,
Marchesi, M.
Future
9(3),25
MDPI AG
2017
4.33
8
Banking with blockchain-ed
big data
Hassani,
Huang,
Silva, E.
Journal
of
Management
Analytics
5(4), pp. 256-275
Taylor
and
Francis Ltd.
2018
3.22
Y.,
H.,
X.,
Internet
9
Inter-Bank Payment System
on Enterprise Blockchain
Platform
Wang, X., Xu,
X., Feagan, L.,
(...), Jiao, L.,
Zhao, W.
IEEE International
Conference
on
Cloud Computing,
CLOUD
2018July,8457854, pp.
614-621
IEEE
Computer
Society
2018
10
Blockchain platform
future bank competition
and
Harris, W.L.,
Wonglimpiyar
at, J.
Foresight
21(6), pp. 625-639
Emerald
Group
Publishing Ltd.
2019
11
Bis: A novel blockchain based
bank-tax interaction system in
smart city
Lu, Z., Wan,
X., Yang, J.,
(...),
Hung,
P.C.K., Huang,
S.-C.
Proceedings
IEEE
17th
International
Conference
12
The advantages of blockchain
technology in commercial
bank
operation
and
management
Wu, B., Duan,
T.
ACM
International
Conference
Proceeding Series
pp. 83-87
Association for
Computing
Machinery
2019
13
Construction of elderly mutual
aid time bank based on
blockchain
Cui, L., Yuan,
K., Zhao, X.,
Mou, L.Y.D.
Proceedings
IEEE International
Conference
Institute
of
Electrical and
Electronics
Engineers Inc.
2019
14
Blockchain, bank credit and
SME financing
Wang, R., Lin,
Z., Luo, H.
Quality
and
Quantity
53(3), pp. 11271140
Springer
Netherlands
2019
15
Blockchain
investment
decision making in central
banks: A status quo bias
theory perspective
Chatfield,
A.T., Reddick,
C.G.
25th
Americas
Conference
on
Information
Systems, AMCIS
2019
Association for
Information
Systems
2019
16
An
automatic
pattern
recognition value system with
listed banks based on
blockchain
Liu, X., Yu, T.
Proceedings
of
2018 IEEE 3rd
Advanced
Information
Technology
Institute
of
Electrical and
Electronics
Engineers Inc.
2018
2019
1.5
17
Improving the Process of
Lending, Monitoring and
Evaluating
Through
Blockchain Technologies: An
Application of Blockchain in
the Brazilian Development
Bank (BNDES)
Moises
Arantes,
G.,
Nogueira
D'Almeida, J.,
Teruo
Onodera, M.,
De
Borba
Maranhao
Moreno, S.M.,
Da
Rocha
Santos
Almeida, V.
Proceedings
IEEE
2018
International
Congress
on
Cybermatics:
2018
IEEE
Conferences
1181-1188
Institute
of
Electrical and
Electronics
Engineers Inc.
2018
18
Blockchain
standards
in
international
banking:
Understanding
standards
deviation
Farrell, S.
Journal of ICT
Standardization
7(3), pp. 209-224
River
Publishers
2019
19
Banking on Blockchain: An
Evaluation of Innovation
Decision Making
Dozier, P.D.,
Montgomery,
T.A.
IEEE Transactions
on
Engineering
Management
Institute
of
Electrical and
Electronics
Engineers Inc.
2019
20
Blockchain Innovation and Its
Impact on Business Banking
Operations
Li, L., Sy, M.,
McMurray, A.
Advances
in
Parallel
Computing
29, pp. 583-598
IOS Press BV
2018
21
FinTech and Sustainability: A
Mini-Review
Al Hammadi,
Tahani
and
Nobanee,
Haitham
SSRN
SSRN
2019
22
Sustainability Practices and
Sustainable Financial Growth
Alhadhrami,
Ahmed
and
Nobanee,
Haitham
SSRN
SSRN
2019
23
The Role of Financial
Management in Promoting
Sustainable Business Practices
and Development
Al
Breiki,
Mariam and
Nobanee,
Haitham
SSRN
SSRN
2019
24
How
Sustainability
Contributes to Shared Value
Creation and Firms’ Value
Almansoori,
Alia
and
Nobanee,
Haitham
SSRN
SSRN
2019
25
Corporate
Sustainability
Reporting and Corporate
Financial Growth
Al
Nuaimi,
Aysha
and
Nobanee,
Haitham
SSRN
SSRN
2019
26
Conceptual
Building
of
Sustainable Economic Growth
and Corporate Bankruptcy
Al Ahbabi, Al
Reem
and
Nobanee,
Haitham
SSRN
SSRN
2019
Table 2. Articles’ Category Based on the Subject
Article Name
Objectives
Findings
Recommendations
1
Understanding modern
banking
ledgers
through
blockchain
technologies: Future of
transaction processing
and smart contracts on
the internet of money
To provide an overview of
the concept of blockchain
technology
and
its
potential to change the
world of banking
It found that the
blockchain technology
has important features
which give it high
potential to be in
financial applications.
Blockchain technology has
positive and negative sides.
The negative side of block
chain needs to be carefully
considered
prior
to
development and using it in
different applications.
2
Blockchain application
and outlook in the
banking industry
To show why banking
industry requires urgent
transformation and is
seeking
new
growth
avenues, Blockchain can
be the solution.
Blockchains
could
revolutionize
the
underlying technology
of the payment clearing
and credit information
systems in banks.
3
Blockchain
Technology:
Transforming
Libertarian
Cryptocurrency
Dreams to Finance and
Banking Realities
The financial technology
(FinTech) sector sees high
potential
value
in
cryptocurrency
blockchain protocols, or
distributed-ledger
technology (DLT)
The author explores
how
blockchain
research
beyond
Bitcoin is closing these
gaps and some of the
challenges that remain.
Regulation and actual
implementation
of
a
decentralized system are
problems that remain to be
resolved. Therefore, the
authors propose some
solutions.
The requirements and
guarantees of blockchains
for cryptocurrencies do not
match those of FinTechfrom
transaction
throughput to security
primitives and privacy.
4
Research
of
a
possibility of using
blockchain technology
without tokens to
protect
banking
transactions
Discusses the use of
Blockchain
technology
without tokens to protect
information about banking
transactions details
The article analyzes the
protection mechanisms
of
distributed
databases, proposes a
solution to the problem
of maintaining the
uniqueness
of
information in them
based on Blockchain
Gives recommendations on
the
introduction
of
Blockchain
technology
into
modern
banking
systems. The authors
propose that blockchain
without mining and tokens
will considerably simplify
processes of maintenance
of integrity and uniqueness
technology
without
tokens.
Blockchain technology
solves the consensus
problem
with
cryptography. Even if
without
the
participation of the
central authority, there
is also a way to ensure
that financial behavior
and
transaction
behavior are all stored
in a common database.
of information on bank
transactions.
If there is a perfect
blockchain-based
credit
system, we can make a
self-verification. Such a
process is not only more
transparent and efficient,
but also reduces the cost of
national regulation.
5
Exploration
and
practice of inter-bank
application based on
blockchain
Analyze the principle
architecture
and
the
technical characteristics of
blockchain and introduces
application scenarios of
the blockchain.
6
Multi-blockchain
model for central bank
digital currency
This paper attempts to use
the blockchain as the
fundamental technology
of CBDC (Central Bank
Digital Currency) model.
CBDC (Central Bank
Digital
Currency)
model should take
advantages
of
blockchain technology
in the supervision,
payment
and
consumption.
In order to use the
blockchain as fundamental
technology of CBDC
(Central Bank Digital
Currency), the challenges
such as the protection for
user's privacy, supervision
and transaction speed
should be solved.
7
Banking
on
blockchain:
Costs
savings thanks to the
blockchain technology
This paper looks at the
challenges
and
opportunities
of
implementing blockchain
technology
across
banking.
The
blockchain
technology
can
optimize the global
financial infrastructure,
achieving sustainable
development,
using
more efficient systems
than at present.
Using
blockchain
technology in financial
processes can be handled
by overcoming the current
disadvantages
of
blockchain which found in
the
“bitcoin”.
These
disadvantages are the
significant
energy
consumption and the high
cost of hardware.
9
Inter-Bank Payment
System on Enterprise
Blockchain Platform
To introduce an end-toend inter-bank payment
systems (IBPS) prototype
based on Hyperledger
Fabric
enterprise
blockchain platform.
The prototype proves
that
enterprise
blockchain platforms,
represented
by
Hyperledger
Fabric,
can facilitate more
efficient and secure
payment services.
Positioning
blockchain
with existing financial
technology is a promising
research direction. Pioneer
research projects have
verified the feasibility and
advantages
of
implementing Real-time
gross settlement system
(RTGS) on blockchain
platforms.
10
Blockchain platform
and
future
bank
competition
The study proposes the
systemic
innovation
model for analyzing and
tracking the path of
innovations. The model
can be applied to any
industry to understand the
process of innovation
The analyses findings
reveal the situation
whereby most banks
still compete to create
their own Blockchain
banking systems. The
analyses, based on the
systemic
innovation
From
the
technology
diffusion perspective, the
future
of
Blockchain
banking may need crosschain interoperability to
support a full spectrum of
payments
and
value
development and the
strategies to win market
share in the banking
industry.
To study the new bank-tax
interaction model based on
blockchain
technology
and
completes
the
implementation
and
verification
of
the
prototype system
model, also show the
low systemic feature of
Blockchain banking at
present.
Most
commercial
banks can obtain the
enterprises
tax
information
in
an
efficient and safe way
through multi-channels
technology
of
Blockchain.
exchanges on the internet
of things.
11
Bis:
A
novel
blockchain
based
bank-tax interaction
system in smart city
12
The advantages of
blockchain technology
in commercial bank
operation
and
management
This paper discusses the
advantages of blockchain
technology
for
commercial banks from
the following aspects: bill
operation,
cross-border
payment operation and
asset
securitization
business of commercial
banks.
Blockchain technology
can
decrease
transaction cost for
both sides and increase
operating efficiency of
commercial banks in
operation
and
management.
To start implementing
blockchain technology for
banks using ripple crypto
currency.
13
Construction of elderly
mutual aid time bank
based on blockchain
This paper combines the
blockchain
technology
with the time bank to build
a blockchain time bank,
and solve problems faced
by current time banks.
Time bank as per
Investopedia is: “a system
of
bartering
various
services for one another
using labor-time as a unit
of account”.
The paper shows that If
time banks use the
blockchain technology,
the pensions funds
system will be more
complete and wealthier.
To start using blockchain
in time banks.
14
Blockchain,
credit
and
financing
This paper sets up a
theoretical
model
to
analyze a new credit
pattern that allows small
and
medium-sized
enterprises
(SMEs)
assessing bank loans
through the blockchain
technology
Theoretical
analysis
demonstrates that the
blockchain technology
enables
the
decentralized
consensus recording of
success
of
debt
repayment or debt
default rendered by
verifying
and
validating
certain
lending and borrowing
activities in distributed
ledgers.
In the newly proposed
blockchain
embedded
credit system, SMEs with
low-risk and high-quality
could
display
their
credibility and risk class
through
information
distribution.
bank
SME
In the same channel,
different functions of
intelligent contract can also
be used to realize different
types of data can be done
using
blockchain
technology.
15
Blockchain investment
decision making in
central banks: A status
quo
bias
theory
perspective
This research draws on the
status quo bias theory to
investigate
Distributed
Ledger Technology (DLT)
investment decisions to
explore the feasibility of
DLT in central banking.
The
paper
found
evidence of different
types of status quo bias
in affecting two of the
most influential central
banks’
Distributed
Ledger
Technology
(DLT)
investment
decision-making.
To
start
using
the
blockchain technology in
the investment banks.
16
An automatic pattern
recognition
value
system with listed
banks
based
on
blockchain
It proposes an automatic
pattern recognition value
system
based
on
blockchain, which allow
investors to reasonably
estimate the stock value of
listed banks automatically
by
using
blockchain
technology.
The new automated
value system based on
blockchain technology
includes three layers:
(a) production of value;
(b) record of value; (c)
assessment of value.
The new value system can
correctly guide investors in
making
a
rational
investment, which will
increase investment returns
and ultimately realize the
rational allocation of social
resources.
17
Improving the Process
of
Lending,
Monitoring
and
Evaluating Through
Blockchain
Technologies
This paper describes a
proposal for a process of
lending, monitoring and
evaluating development
projects in the Brazilian
Development Bank using
blockchain technology.
The proposals increase
transparency of public
money
allocation,
simplify
manual
activities,
reduce
operational costs and
produce data to support
aggregate analysis of
the benefits arising
from the bank's loans.
After highlighting the
difficulties to implement
the mentioned proposal,
this paper also discusses
what can be done as a
transition process using
blockchain technology and
outlines what have already
been done.
18
Blockchain standards
in
international
banking:
Understanding
standards deviation
Discusses how blockchain
standards need to be
integrated into the other
standards of international
banking to facilitate the
effective use of the
blockchain technology in
the banking industry.
The article describes
the role that blockchain
can
perform
in
international banking
and why standards are
needed
for
this
transformation.
19
Banking
on
Blockchain:
An
Evaluation
of
Innovation Decision
Making
Blockchain
technology
was
examined
as
technology innovation in
the financial services
industry.
Based on 12 financial
services providers, the
authors found that
financial
service
organizations tend to
view
blockchain
innovation as a lower
priority due to the lack
of a clear path of value.
The
standards
which
developed
for
implementing blockchain
technology and the existing
standards
applied
in
international finance are
not
aligned.
These
differences in the standards
can create a lot of conflicts
in the future, so it should
not be ignored.
As industries face new
technology and innovation
such as blockchain, they
must consider efficient
ways to explore and to
determine whether they
can capitalize on the
innovation to be used or
not.
20
Blockchain Innovation
and Its Impact on
Business
Banking
Operations
The main purpose of the
paper is to show that
blockchain
technology
may disrupt the existing
business models and to
explore how this may
occur.
To survey and examine the
role of FinTech as a
speedier of innovative and
focus
on
sustainable
performance of FinTech.
The new technologies
like blockchain may be
one of the drivers of
business
model
innovation.
It is recommended that
mangers should follow
developments in this field
in order to prepare for
possible disruptions in
their industries.
21
FinTech
and
Sustainability: A MiniReview
FinTech
Plays
important role for
development
in
financial
businesses
and
speedier
of
innovative. Also, it has
significant and positive
impact in supporting
sustainable corporate
performance.
More research is required
to help understanding the
relationship
amongst
Fintech and sustainability.
22
Sustainability
Practices
and
Sustainable Financial
Growth
To identify, analyze, and
categorize the possible
steps to develop the
financial sustainability of
a company and study the
possible risks.
The development and
effective functioning of
risk management and
financial growth will
expand with applying
sustainability practices.
The overall performance of
the enterprise, financial
stability and the possibility
of further development are
known to depend on the
numerous
aspects.
systematic indicator can be
sued to ensure the
effectiveness
of
the
financial mechanism.
23
The Role of Financial
Management
in
Promoting Sustainable
Business Practices and
Development
To explore the role of
financial management in
promoting
sustainable
business practices and
development.
Allocating
capital
budgeting
for
sustainable
issues
enhances
the
competitive advantage
of the business.
The study concludes that
financial
management
plays a vital role in
promoting
sustainable
business practices and
development.
24
How
Sustainability
Contributes to Shared
Value Creation and
Firms’ Value
To
show
how
Sustainability Contributes
to Shared Value Creation
Sustainability practices
in the firm improve the
financial growth and
decision making in
respect of the cost of
capital,
capital
budgeting, investment
returns and working
capital management.
Risk mitigation and risk
management tools and its
execution can decrease the
risks in business. Also, the
bankruptcy
can
be
decreased through proper
implementation of low-risk
sustainability
financing
models.
25
Corporate
Sustainability
Reporting
and
Corporate
Financial
Growth
This study is a detailed
synthesis of sustainable
practices
within
the
financial systems and how
corporate disclosure is
fundamental with regard
to sustainable financial
growth.
Shows the value added
to specific firms and
industries
through
sustainable approaches
as
well
as
the
occurrence of more
optimal decisions by
managers
through
sustainable
policy
The report provides an
outlook on the risks
associated
with
the
sustainability initiative and
how such risks can be
managed for seamless
integration
of
sustainability
aspects
within
the
financial
systems.
integration with the
financial decisions.
26
Conceptual Building
of
Sustainable
Economic Growth and
Corporate Bankruptcy
To discuss the meaning of
corporate
social
responsibility and show
several methods used for
building
sustainable
economic growth and to
reduce
corporate
bankruptcy.
The current condition
of corporate social
responsibility and its
disclosures can be
understood in a better
manner with the help of
the
neo-institutional
theory and the concept
of
institutional
entrepreneurship.
Sustainable
practices
should be increased in
more corporations, because
it
helps
in
the
establishment
of
the
commercial success of the
organization.
Results and Discussion
Blockchain mechanism:
Blockchain technology depends on the public database. So, all earlier digital data and all previous
transactions which occurred are saved in all public computers which use the same technology and
interconnected through the same blockchain network. For a new block of information to be
correlated to the previously existing information, the block needs to:



Identify and confirm the direct previous block.
Have the details of the transaction such as time and amount
Include a unique defining serial number that cannot be changed.
Blockchain has many characteristics and advantages which qualify it to be part of many
applications soon. The major advantages of the blockchain technology are:
1. High security: because it depends on many public users and servers, not only one main
server.
2. Transaction transparency: from which IP address to which IP
3. Decentralized system: no need for intermediate, directly peer to peer
4. More efficient transactions: faster and less cost.
5. The capability of automation.
Because of these advantages, blockchain technology can be used in many applications other than
the virtual currency. Some experts expect that blockchain technology will change the meaning of
business completely. They relate the revolution which may happen because of blockchain
technology to be like the revolution which happened because of the internet.
For example, computers and internet technology altered the hard copy to soft copy. Also, the
internet has changed the meaning of shopping. Compared to that, some experts think the same.
Blockchain has a high potential to be used in many fields such as the supply chain industry,
government services, military innovations, banks, etc. (Bloom J., 2018). Also, some corporates
started using blockchain in other businesses such as real state, travel business, online advertising
and even the energy industry.
In this paper, the main concentrate of blockchain will be on its application in the banking industry,
and how it is related to Fintech and sustainability.
In the last couple of years, Fin-Techs (financial technologies) such as mobile banking, Wi-Fi-bank
cards and multi-currency cards have completely changed the retail banking industry world wild.
Similarly, sustainability and corporate social responsibility (CSR) has changed the business model
totally. On the other hand, when it comes to using the blockchain techniques in the financial
industry (banks), the technology is still not utilized much. Even though blockchain technology has
high potential to be used in the banking industry because of its advantages which were discussed
before, it is still not used much so far. In addition to the mentioned features, blockchain has more
features that help in financial applications. These features are mainly and briefly about high
security and integrity. The supporters of using blockchain knowledge in the financial services
argue that adopting this technology will enhance transaction effeminacy in terms of cost and time.
Also, these high security and transparency features are very important for regulatory requirements.
If this technology is used by the central or federal bank, it will reduce a lot of authentication audit
issues.
Conclusion
Blockchain technology is mainly an internet technology that has a high potential to make
revolutionary changes in many fields. The banking industry and service can totally be transformed
because of this technology. As discussed in the history part, Blockchain got famous for introducing
the first virtual currency in 2008 which is the Bitcoin. After that, many virtual currencies have
been introduced, but none of them is officially used worldwide as a medium of transaction. Many
big corporations and governments started to research and development in this field. One of the
famous expected virtual currencies is the “Libra” which is introduced by Facebook, the most
famous social media in the world. If the Libra got accepted and adopted, it will make a revolution
changes in transaction and payment services.
Even though the blockchain has many advantages such as high security, decentralized system and
automation capability, which promote it to be the future of banking and financial services, it also
has many disadvantages. Some disadvantages directly can affect the banking industry such as:
1. Lack of understanding and adopting, mainly because it is relatively considered new.
2. This technology uses massive energy, which is against “green and sustainability”
3. Transactions are irreversible.
4. Although it has high security, in the end, it is related to a public database, which has the
possibility to be hacked.
Because of these disadvantages and some other reasons (technological, economic and even
political), this technology is facing high resistance. In my humble opinion, these resistances is only
delaying the use of this technology, but it will not prevent it. If Facebook succeeded in its virtual
currency, it will be the beginning.
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Additional Reading
AlFalahi, Latifa and Nobanee, Haitham, Conceptual Building of Sustainable Economic Growth and
Corporate
Bankruptcy
(October
19,
2019).
Available
at
SSRN:
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http://dx.doi.org/10.2139/ssrn.3500885.
Al Muhairi, Mariam and Nobanee, Haitham, Sustainable Financial Management (October 19,
2019). Available at SSRN: https://ssrn.com/abstract=3472417.
Alshehhi, A., Nobanee, H., Khare, N. (2018). The Impact of Sustainability Practices on Corporate
Financial Performance: Literature Trends and Future Research Potential. Sustainability, 10 (2) pp
494-519.
Nobanee, H., Ellili, N. O. (2016). Corporate Sustainability Disclosure in Annual Reports: Evidence
from UAE Banks: Islamic versus Conventional. Renewable & Sustainable Energy Reviews, 55,
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