10 ADVANTAGES OF BLOCKCHAIN TECHNOLOGY IN THE BANKING INDUSTRY
- Faster payments
Every transfer is recorded on each user’s computer, generating a platform of trust based on several identical copies of the ledger. So by adopting blockchain, banks can remove the need for verification from third parties and accelerate the processing times.
- Clearance and settlement systems
A decentralized ledger of transactions like blockchain could enable banks to keep track of all the transactions publicly and transparently. Banks won’t need to rely on a network of custodial services and regulatory bodies like SWIFT. They could simply settle transactions directly on a public blockchain.
- Buying and selling assets
Blockchain will revolutionize financial markets by creating a decentralized database of digital assets. Cutting out the middle part will also lower the asset exchange fees and speed up the process. A report shows that moving securities on blockchain may save from $17 to $24 million each year in global trade costs.
Blockchain fundraising methods have a number of advantages over traditional methods such as: speed, global, flexibility, protection, fractionalisation, legitimacy, credibility, removal of middle men,…. Today has several blockchain options: Initial Exchange Offerings (IEOs), Equity Token Offerings (ETO), and Security Token Offerings (STOs). And STO is currently the most popular option because it’s legally protected.
- Credit and loans
Blockchain offers a more secure, efficient and cheaper way of processing loan applications. Because all the information provided by specialized credit agencies to evaluate the risk no need to concentrate in a centralized system, which may get hacked and exposed.
- Trade finance
Blockchain-based trade finance will streamline the trading process by getting rid of such time-consuming manual processes, paperwork, and bureaucracy with the information integrated into one digital document, which is updated in real-time and can be accessed by all network members.
- Blockchain in banking as digital identity verification
With blockchain, consumers and companies will benefit from accelerated verification processes. That’s because blockchain will make it possible to reuse identity verification for other services securely. Users will need to register their identity on the blockchain only once and be able to choose how they wish to identify themselves and with whom they agree to share identity. All the process on blockchain ensures its security.
- Blockchain in banking for accounting and auditing
Experts believe that blockchain will simplify compliance and streamline the traditional double-entry bookkeeping systems. It would work like a digital notary who verifies all the transactions and be used in such applications to invoice payments automatically as well.
- Hedge funds
A hedge fund is a type of investment partnership which aims to maximizing investor returns and minimizing the risks. Blockchain is likely an internal solution to track investors and ownership without relying on a fund administrator. No longer to stuck with a huge amount of information in paperwork, investors can securely check their investments whenever they want in real-time.
- Peer-to-peer (P2P) transfers
Blockchain will help to decentralize applications for P2P transfer across the entire globe. Its transactions will take place in real time and you may save money for commission instead of other P2P transfer service. Moreover, the recipients won’t have to wait four days until they receive money.
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