Impact of Blockchain on the Banking Sector
Impact of Blockchain on the Banking Sector: It’s 2017, and Bitcoins and cryptocurrency are the latest trends in the market. With each week passing towards 2018, these cryptocurrencies are setting record highs in all financial markets, and most importantly, blockchain technology is transforming almost entirely the business as well as the technical aspect of the world as we know it today.
Benefits to the global banking system
It is noteworthy that not only individual national banking sectors but all in all the global banking sector in its entirety can benefit from the blockchain technology, by implementing the almost revolutionary system of distributed – ledger technology. This covers the entire banking sector itself, right from payments to settlements or compliances; it is totally efficient because of the key attributes of the blockchain technology itself – decentralization of workloads and processes, immutability, and last but not the least, security. Couple these with the high efficiency and cost-effective nature of this technology and the business sector of banking will have benefited a lot from its adoption.
The adoption of new techniques and currencies
Banks of today are now teaming up to design a totally new digital currency form that is based solely on blockchain. And they intend to launch this new form of currency in 2018. Their main goal is to create what is called the “utility settlement coin.” This new form of digital currency will be using the blockchain technology to do fast transactions and jobs including, but not limited to, clearing and settling well routes of financial transactions and processes.
The main aim and consequence
The aim of all projects related to the implementation of the blockchain technology, including the above mentioned goal, is to reduce all labor and redundancy by reducing time constraints, cost constraints, capital constraints and so on and so forth. All this would otherwise have been required for clearings post-trade and processes related to settlements. And increase the efficiency of the banking sector. Consequently it thus shows the backends of all the banking sectors yet another path to efficiently adopt and use the blockchain technology. This is because the utility settlement coin will be allowing banks to allow value and asset transfers fast, without having to wait for long time periods.
In opposition to the modern way of transactions that are still done the traditional way, the blockchain technology, if and when, adopted all throughout the global banking sector, will increase efficiency in all respects. This includes storage of the currency, as they can be converted into flat currency in central banks, stored on the blockchain, and fast swapped for security during tradings.
Needless to say, all the sectors, payments and all, of the banking sector will receive much needed boosts from this blockchain technology and improve drastically.