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Every now and then, one sees an introduction to new technology. After the outbreak of the ‘Internet’, almost two decades later, a technology that can truly revolutionise the way the financial services industry works has now come into play. The ‘Blockchain’. It is ready to take centre stage and from the looks of it will stay under the spotlight for good.
What is Blockchain?
Essentially Blockchain is a technology that assists in cryptocurrencies, it basically takes principles of cryptography and peer-to-peer networking, allowing unique monetary data exchange. To avoid any issues of double spend, by making the data easily assessable to all individuals in the network. A process is generated through which consensus can be reached, in making any changes if required to the ledger. It is a shared digital ledger.
The advantages or benefits of this technology are immense. To begin with, it offers transparency, traceability, is cost effective, very reliable, simple, eliminates any room for error, speeds up the process and offers a better quality of data.
With such great features, Blockchain will surely have a great Impact on ways it can transform the financial services industry.
Asset Management settlements, usually is a cumbersome process, with the introduction of Blockchain technology, the same process can be simplified. It can provide automated trade cycles, ensuring that everyone involved in the transaction has the same information. In doing so, besides the benefits of cost and accuracy, it could also eliminate brokers.
Claims processing in insurance companies could eliminate challenges like, incorrect claims, documents and legacy in isolation and manual processing. By introducing smart contracts on Blockchain, for transparency and accuracy, it could improve and simplify the risk model for insurances.
Trade finance in a supply chain is one of the most amazing opportunity for the application of smart contracts and Blockchain.
Payments, specifically the global transactions are massive, slow in the process, and costly in the transaction, also not always traceable in its entirety and time-consuming. The blockchain is the ready solution for it eliminating all the said challenges.
Financial companies across are responsible for compliance with a number of requirements.
The introduction of Blockchain will ensure that a single digital source of ID will allow an effortless exchange of documents between banks and external agencies. It is established that Blockchain has immense potential, and if applied correctly can have tremendous positive impact for customers, banks and financial institutions. It is needless to say, that cost cutting in terms of layoffs will be unavoidable as very little intervention is required for operations.
For example, jobs which involve processing and reconciling might fade away. And at the same time, new opportunities in fields like encryption and identity protection will develop. Giving way to a more diverse range of careers which will come into play as Blockchain develops.