Compete or deal with it. Banks on blockchain road
The blockchain is a ledger technology that has been developed to record all the transaction of cryptocurrencies. This is something that is emerging worldwide as most of the businesses either already using blockchain in some parts of their businesses or they are experimenting with prototypes on how it can be applied to their businesses. This revolution of micro-currency with blockchain network is mainly due to its multiple benefits that companies can enjoy compared to ordinary financial transaction systems.
One of the benefits that businesses could gain is the high transparency that leads to improving customer loyalty. Companies such as Nestle and Wal-Mart have applied blockchain in their supply chain where all the related parties from farmers to consumers have accesses to check the quality of the food through blockchain network.
Nature of its higher cost-effectiveness, efficiency in the transaction as well as transparency and traceability companies like DHL, CGS, Brilliant earth have adopted blockchain network and being able to do business without many conflicts that occur in ordinary transactions.
As a result of a number of leading businesses adopting blockchain network, many banks, and other financial institutions also have started adopting blockchain in order to full fill emerging financial requirements.
Especially for cross-border payment processes, many banks prefer blockchain over traditional payment processes as while it can be done in a shorter period, cost-effectively all the members related to the transaction have a better insight about the transaction processes which makes the processes very transparent and secure.
IBM is one of the examples where they have partnered with Stellar.org and Kick EX group to implement efficient and effective banking solution processes through blockchain mainly for cross-border payments. They believe that this would make huge improvements in banking as it eliminates the complications attached to cross-border payments which require a longer period of processes with different financial institution involvement. IBM also predicts that blockchain would expand the capability of providing financial solutions to one billion people by 2020 with the blockchain distributed ledger.
As reported by Fintech firm R3 22 leading banks including Barclay, HSBC, KBC, Natixis have developed a transaction process adopting blockchain network in order to gain benefits as above mentioned.
Other than the companies mentioned above, MicroMoney has also implemented the blockchain into their loan providing process. MicroMoney is an open source credit and Bureau which provides microloans to underprivileged communities who are unable to get a loan from traditional banks. The blockchain plays a major role in this process as all the credit history and big data of these borrowers are stored in this decentralized system. Furthermore, this network allows them to access to the global economy.
Even though many businesses and banks are looking into ways on how cryptocurrency and blockchain network can be applied in their business some banks are still not sure about the suitability or the feasibility of this new technology.
This is mainly due to lack of knowledge and skills on the subject. For banks to explore new opportunities with the usage of micro-currency and blockchain ledger network bankers needs to have a clear picture of this processes and how it can be applied to provide better banking solutions.
As the middle to big organizations is implementing or being ready to deploy transactions with cryptocurrency and blockchain it’s high time for bankers to be ready to fulfill client’s requirements and to be in line with this new technology.