How Blockchain Financial Services can Drive Impactful Change in the Industry?

Blockchain is disrupting the finance sector by revolutionizing the whole way of performing financial transactions and storing, transferring, and sharing data. However, its impact is not at its peak as several financial services providers hesitate while making a bet over this technology. Considering Blockchain as a foundation technology would be right, as the technology has a long way to go when it comes to empowering the financial sector. Still, the industry transformation is noticeable.

According to Statista, the market size for Blockchain solutions for the banking system and financial institutions was estimated at 0.28 billion U.S. dollars in 2018. The number of applications of Blockchain technology in the financial industry is also expected to grow more in the next few years, reaching a market size of approximately 22.5 billion U.S. dollars in 2026.

The major reason behind this consistent growth in Blockchain adoption rate is better security and efficiency. In this blog, we will explore how Blockchain applications in finance can drive impact change, providing several benefits. 

• Fraud Prevention 

Blockchain is a solution to validate safe and secure transactions without any risk of fraud. The peer-to-peer network and anti-tampering features of the Blockchain make it an ideal technology to choose for the speedy movement of verifiable, fraud-free information and transactions. In addition, the cryptographic algorithms of Blockchain financial services help process and store transaction blocks that the majority of financial institutions find less risky while processing transactions. 

• Privacy and Confidentiality

The current banking system takes up to weeks to settle a particular payment as each transaction has to go through several intermediaries. Guaranteeing the security and authenticity in such a centralized system where there is a central authority to control the data and intermediaries involved to process the transactions is difficult. Banks can use smart contracts to automate transactions that reduce the number of workers needed for the operation as well as shorten the processing times. The private and hybrid networks of Blockchain are well-developed to handle hundreds of transactions per second. Blockchain’s decentralized and immutable ledger feature addresses privacy and confidentiality issues and guards the transactions against hacker attacks. 

• Assurance of Transparency

The lack of transparency in the existing financial industry also leads to inevitable security risks, as nobody is aware of what’s happening until the data is compromised or loss occurs. Although no one wants their financial information to be public, some degree of transparency is crucial for clients and financial service providers. As the distributed ledger is difficult to modify, the ownership can easily be tracked, and trust can be built among the parties involved. 

• Boost Stakeholders Confidence in the Transaction

The use of advanced cryptography is resistant to hacking. This feature enables Blockchain to ensure secure transactions and instill confidence in the transaction environment. Several Blockchain applications in finance are available in the market. It is prudent for investors to comprehend how Blockchain is revolutionizing the financial system and how to benefit the most from this innovation as the global financial system becomes more digitally integrated. 

There is so second thought that the financial industry is prone to significant risks, including building trust between intermediaries to offer loans. Failure to meet obligations by counterparties and credit risk caused by information asymmetry are also concerns. Additionally, commercial banks concentrate on loan tracking, which ultimately relies on intermediaries. Financial service firms lack proven risk management techniques or methods. However, the story is different with the Blockchain-integrated financial system. Blockchain allows linking to digital currencies like Bitcoin, which use Blockchain technology as a form of investment or currency. Blockchain applications could lead to enhancements in financial product accessibility, cost savings, and other major changes.

• Data Traceability 

Blockchain is primarily used to accomplish financial tasks such as clearing and settlement, loan syndication, and trade finance. This groundbreaking currency, transaction mechanism, and banking system are giving an edge to global financial transactions. One of the key factors contributing to the success of Blockchain financial services is its potential to improve the efficiency and traceability of data in transactions. Smart contracts eliminate the need for human involvement in transaction execution and ensure the least chances of errors. This distributed ledger technology records all the data and transactions digitally. Hence, accessing the transaction records anytime and anywhere is easier. The immutable and transparent ledger stores the data and transactions in a decentralized network that enables participants to verify, trace, and access the origin of the assets or information. Such transparency reduces fraud, and transparency and maximizes profits. 

Conclusion

Blockchain technology has the potential to transform the financial industry by enhancing security and efficiency. It provides a secure, decentralized platform for financial transactions that helps eliminate the need for intermediaries and reduces the risk of fraud and errors. Additionally, it can significantly reduce the time and cost associated with financial transactions, making it an attractive option for businesses and individuals alike. As Blockchain technology continues to evolve, it is likely to play an increasingly important role in the financial industry, transforming the way we think about finance and transactions.

Make the most of the Blockchain financial services with Antier, who help you join the digital race with a robust Blockchain-powered solution that empowers your financial tasks efficiently. Connect with our team today!