Although a large number of people have heard about Blockchain technology, this has been largely focused on the context of the meteoric rise and subsequent fall of the cryptocurrency, Bitcoin. However, Blockchain technology is not merely limited to cryptocurrency and has a wide variety of uses across an array of industries. One such industry which could have enormous potential gains from the usage of Blockchain technology is the Finance Industry. This article seeks to explore the implications that of blockchain in Finance
Many major financial houses are exploring the usage of Blockchain technology in payments due to the fact that it does not necessitate the use of a clearinghouse. This will increase the efficiency in the transfer of remittances in both bank to bank as well as peer to peer transactions. This can be used for both domestic as well as international payments. Given that an international transaction often takes days, it seems more probable that the technology will be employed for international transactions.
Banks are responsible for verifying the identity of the customer through a KYC process. This identification process is targeted at curbing fraud and money laundering. Given the nature of blockchain technology, all parties to a transaction would be visible on the open ledger and identity can be stored on a blockchain. Banks and other financial institutions are given access to this source can then refer to this in order to satisfy the KYC norms as prescribed by law rather than individually asking customers to provide information.
The lending process, especially when it consists of a consortium of lenders requires a large number of days in order to process the transaction. This is so because it consists of a number of written agreements, followed by a determination as to whether the transaction is permitted by the credit agreement and finally concluded with the execution of the transaction documents.
Blockchain in finance reduces the time taken by a significant amount by coding the credit agreement and various other requirements into a smart contract which will employ various parameters and execute the contract.
Given the vast uses and advantages of Blockchain technology and the constant evolution of the technology, many providers of financial services are exploring the manner in which this technology can be employed in order to increase efficiency in the sector. This has resulted in a huge increase in the demand for blockchain developers in the world. Explore our blockchain for beginner courses here.