Blockchain has taken the word by storm owing to the transformations it has brought for the businesses across the multiple sectors especially for the Financial services. Every now and then, a fresh announcement makes its way in the banking sector about how it is adopting blockchain technology to transform the large amount of data that they possess.
The perfect combination of cryptography and the databases, the blockchain technology enables multiple parties to have access to a digital ledger simultaneously. Whilst the bankers were a bit skeptical regarding this technology in its initial days, today it stands to be one of the hottest buzzwords in the sector and is attracting millions of people.
In this article, we are going to shed some light on the top 5 ways by which the blockchain development is revolutionizing the finance sector.
- Transparency in Insurance
Some of the challenging factors which lead to customer dissatisfaction in the insurance sector are manual processes, fraudulent claims, legacy underwriting models, etc. Creating policies with the help of the blockchain serves to be one of the best use case for insurance. This not only offers complete control, traceability and transparency for each claim but also leads to automatic pay-outs. It also improves risk modelling and reduces fraudulent claims to a significant level.
- Simplification of the Asset Management
The traditional processes within the asset management are done manually and hence are slow and cumbersome at times. In addition to this, the process is also getting more complex owing to the non-standard investments and cross-border transactions. Since all the parties involved in the trade lifecycle like dealers, custodians, settlement teams, etc. keep a record of their own for the same transaction, a lot of error and inefficiencies can arise. Blockchain technology aims to signify this entire process by providing an automated cycle to all the parties involved in the transaction.
- Automation of Supply Chain
One of the most exciting opportunities that the blockchain technology has brought with itself is the digital transformation of the supply chain. The existing supply chains are complex, slow, and the parties involved in this don’t trust each other. In such a scenario, blockchain comes up as a great solution to remove all these factors as they bank does not have to give the letters of credit, cust down the fees paid to the middlemen and also creates a network of trusted resources.
- Adhering to the Compliance
The financial institutions present in the world need to comply and report the requirements of their local regulator. KYC is a local requirement and needs to be taken care of these institutions. However, this entire process is highly time consuming and due to the lack of automation leaves chances of errors. Blockchain solutions provide a single digital ID information and allows the exchange of information in a secured and a seamless manner. Thus, privacy of the entire data and efficient processing of the information is guaranteed.
- Easy International Payments
The vertical of global payments is gigantic, costly, prone to errors, and cannot be traced at times, which leads to money laundering. this sector is truly in the need of some revamping and this is what blockchain is doing. Santander has become one of the first banks to apply blockchain to its payment app and has enabled the customers to make international payments 24/7.
What’s in Store for Us?
The financial sector has been trying to set up a shared digital environment for recording the identities of their customers and keep them updated at all points of time. Since they have failed to find the right formula, the conflicting demands has always been on the rise. Blockchain comes as a promise to solve this issue as it offers cryptographic protection and keeps all the parties involved in a transaction updated.
Therefore, the key to success lies in making use of the blockchain technology applications to the optimum and leverage the benefits they have to offer.