Putting aside the recent rollercoaster ride of cryptocurrencies, blockchain technology itself is set to transform the financial industry as more across the board are coming to realize the inherent benefits that the technology provides.
Of course blockchain has already transformed payments and continues to do so. However, there are multiple reasons why you’re likely to start seeing more and more banks, financial institutions, and others in and even around the industry turn to blockchain.
One of the Big Ones — Fraud
Fraud is arguably the most frustrating expense in the industry, costing U.S. banks over $2 billion in 2016 and costing financial services companies $2.92 for every every dollar of fraud in 2018. With the intrinsic ability to resist attacks such as DDOS and hack attempts, along with quick and accurate verification of customer identity with blockchain-enabled digital ID and elimination of transaction delays, blockchain stands to make a huge impact in the fight against financial fraud.
Ownership Transfers
Banks and lenders are growing more intrigued by the use of blockchain and ledgers to conduct property ownership transfers and other transactions. Because the technology is hard to tamper with, ledgers provide a trustworthy and real-time source of information about almost any type of property.
Automation the Blockchain Way
With smart contracts, the finance industry has the ability to automate those activities that normally add delays, complexity, and of course cost, to transactions. With the ability to monitor when a buyer makes a payment and when a seller delivers their end of the deal, as well as handle a variety of issues that may arise, smart contracts offer numerous advantages. When programmed correctly, encrypted smart contracts could lead to faster, automated lending decisions.
Transferring Money
It’s pretty much common knowledge that if you use a bank to transfer money internationally, you’re going to pay some super high fees. Every year, both businesses and consumers send hundreds of billions of dollars internationally and the process has generally been cumbersome and expensive.
While other options can range anywhere from 0.6% to upwards of 7% or more, those organizations that do a lot of international wire transfers know all too well how quick these fees add up. Now, banks and financial providers are utilizing blockchain technology to lower fees and improve remittances overall.
Several major banks recently partnered with Ripple in order to utilize blockchain technology for facilitating cross-border payments, and even more across the industry are busy developing solutions.
Sports Betting
Traditionally sports betting has been a fragmented market with centralized authorities where payments could take weeks to be delivered. With blockchains like BlitzPredict set to provide the best odds, instant payments at the conclusion of the sporting event, and the use of smart contracts, the sports betting arena is set for a huge financial boon with blockchain technology.
Continued Positive Impact on Payments
Of course the most significant change that blockchain has made to the financial industry to date has been its cryptocurrency. Changing the way the world thinks about currency in general, Alt coins like Bitcoin (BTC) and Litecoin (LTC) have become popular means of currency and the popularity of cryptocurrency doesn’t appear to be slowing down anytime soon.
As more merchants accept a wider range of cryptocurrencies and consumers continue to utilize the benefits of blockchain technology for financial transactions, the impacts are going to continue to be seen far and wide. More competition will quite assuredly lead to even lower fees and continued investment in the technology by banks and others in the financial industry is only going to spur even more to join in.
Speed, security, and accuracy are all intricate keys for banks, lenders, mortgage brokers, attorneys, and so many other industries that it is indeed going to be quite interesting to watch the integration of blockchain and the impact it has on finance as a whole as we move forward through the next few years.
