Blockchain has acquired an impactful grip for becoming a tremendous technology which helps to attain decentralized future with real-world use cases. Blockchain initiatives are propagating and the emerging countries like India have begun their blockchain ecosystems. In 2019 blockchain technology will be adopted in few more mainstream industries including healthcare, banking, retail, logistics and finance.
As a growing superpower, India requires a perfect solution for solving the major problems like middlemen intervention, data breaches, corruption and tampering of financial ledgers when the blockchain is the most valuable solution prevails. In India with more than 6 million engineers who are able to deliver output, holds almost 55% of market share in the global IT services to become the digital capabilities hub across the world. India, as the biggest democracy, needs a revolutionary technology to reform major sectors including agriculture, healthcare, financial services, and real estate. The recent developments in this technology and the outlook of the bureaucrats on the blockchain are in favour of India’s capitalization on the technology.
Blockchain is no longer identified as an abstract technology for simply supporting the crypto-currencies. About 58% of investors and 55% of consumers believe that blockchain is hopeful in its potential for safe money transfers. The most important thing is that the customer perception of the blockchain is changing too. According to the Deloitte survey, only 18% of respondents in the US take blockchain as a usual "database for money" with a few other applications outside the financial sector. For most people, Blockchain is a promising new technology that is capable of transforming a huge number of business processes. In reality, this is how most businesses and people view blockchain nowadays. The same survey also shows that 74% of companies say they already have a persuasive business case for the blockchain technology and 34% already initiated a blockchain operation.
How the blockchain technology can be implemented in the BFSI industry
The clubbing of shared databases and cryptography of blockchain technology enables the multiple parties that remain unknown for each other from various geographical locations for simultaneous access to the frequent update of digital ledger that can't be changed. The blockchain technology is a dominant technology which allows the Bitcoin, Litcoin, Dogecoin and other virtual currencies to be safe, anonymous and open. They are the actual database on all Bitcoin transactions in detail. Generally identified as a public ledger, the register contains metadata on when and how all the transactions are operated. The ledger can also be publicly accessed through APIs and many other torrent sites. The databases are secured using cryptography to prevent interference with the present and past transactions.
The cryptography can edit only the blockchain parts that they own by acquiring the private keys that are required to write to the file. This also helps to keep everyone's copy of the blockchain that is distributed in sync. The blockchain implemented in banks will save billions of money by dramatically decreasing the processing costs. Banks are always ready to utilize the opportunity to decrease the transactional costs and reduce the amount o paper which they process. Thus blockchain implementation will be a perfect step that can enhance the profit and value of the banks.
The major banks try to experience the benefit of blockchain that is useful in money transfers, record keeping and other functions. The application of blockchain transforms the finance process of paper-intensive international trade to the electronic decentralized ledger which enables to have complete access to a single source of information for all participating entities including banks. This also enables them to track the entire documentation and evaluate the asset ownership digitally like a un-alterable ledger in real time.
Given below are a few ways in which the blockchain benefits the BFSI sector
Reducing fraud attacks
The blockchain is referred to like the latest technology which reduces fraudster in the financial sector as 45% of financial mediators in money transfer services and stock exchanges are exposed to financial crimes regularly. Many of the banking systems in the world that are built in centralized databases are more susceptible to cyber attacks as the hackers get the entire access easily once they hack them. The blockchain technology will help you to avoid the current crimes committed online nowadays in the financial institutions to a great extent.
The benefit of 'Know your Custome' (KYC)
According to the significant survey conducted by Thomas Reuters, many of the financial institutions spend 60$-500$ million per year for Know Your Customer (KYC) and the customer due to diligence regulations. Such regulations help to reduce money laundering and many terrorist activities by having the needs of business in verifying and identifying their clients. Blockchain enables an organization to have access to the verification details of its clients by other organization and thereby avoids the repetition of the KYC process.
Having smart contracts
Blockchain aids smart contracts as they aid the storage of any type of digital information that includes computer code which can be implemented once two or more parties enter the keys. Contracts can be created and financial transactions can be implemented when the code is programmed depending upon the set criteria.
Blockchain a technology surpasses Bitcoin
Though the concept of decentralised ledgers has been around for a while, blockchain became trendy with Bitcoin, the first blockchain application. The cryptocurrency was widely adopted by the parallel economy and faced resistance from many nations as they provided the anonymity and lack of rules in the space. This resulted in a reputation crisis for the entire blockchain concept as people took it as a synonym for cryptocurrency. As per a study conducted by Stanford University, 55% of Blockchain initiatives for social welfare have been showing a successful impact. The projects that are related to governance and democracy are of great significance in its impact. The Estonian government was one among the first few governments to adopt this technology to enhance the efficiency, security, accessibility towards government services of the country.
The enhanced scalability of Blockchain technology
Blockchain will undergo tremendous changes in the coming years with the research advancements in the scalability, decentralization and the security. On-chain and off-chain scaling solutions will boost the networks' transactional capacity. A report says 84% of respondents claimed their organizations are influenced by blockchain. In the coming years, we can witness the real products getting off the grounds with new business models. The present products would scale up their reach and benefits from greater RoI.
This encourages enterprises to turn up with more blockchain products. Nevertheless, companies across the world now know their potential to address key business issues. The ingenious blockchain initiatives will not only wipe out the mediators and cut down costs, but also provide effective transparency and traceability to various business processes. The significant research and advisory firm Gartner predict found that the business value of the Blockchain technology will be more than $3trillion by 2030.