Why The Banks Are Investing In Blockchain Technology

Blockchain technology is a leading innovation in the financial industry and promises to reduce fraud, ensure safe transactions in extra quick time and overall help manage risk within the global financial system.

IMAGE: PEXELS

What Is A Blockchain?

A blockchain is a digital database that is shared among the nodes of a computer network. It stores information electronically in a digital format and they are known for their role in cryptocurrency systems (like Bitcoin, Floki Coin, Ethereum, etc.) to maintain a secure decentralized record of transactions. The blockchain collects data in blocks containing a record of information that is all linked together in chronological order.

This technology manages transactions of information and lowers the cost of transactions to make them faster and more efficient. The blockchain can be integrated into different industries and can provide investors with many different opportunities. One industry in which the blockchain has clear applications and a great future is financial services.

To Increase Security

Scammers and hackers continue to attempt to ruin the lives of normal people going about their day-to-day lives. However, with blockchain technology, the concern of being scammed is significantly reduced. Payments and the exchanging of money made on the blockchain are faster, traceable, and more secure than traditional banking.

When information flows through different financial intermediaries, there’s always a risk of interception of the information, which increases the risk of fraud. With cryptocurrencies, this can be fixed with blockchain encrypted algorithms that heighten security in the exchange.

In normal traditional finance, audit trails can be difficult to obtain, which has led to economic losses previously due to negligent behavior. With blockchain and machine learning, the risk can be significantly reduced. Fintech companies and other businesses that use large amounts of data need a blockchain to build data integrity.

To Lower Costs

The blockchain provides investors with an opportunity to benefit from lower costs associated with traditional financial services and financial advisors. Fintech companies have become a huge part of the financial services industry, which allows people to open accounts with digital advisors to make financial decisions. FinTech’s relationship with the blockchain will inevitably become stronger than its role in global finance increases and gets stronger.

The institutions that adopt the technology will be able to streamline internal processes and provide customers with lower-cost services, reducing transaction fees and currency exchanges worldwide.

To Safely Record Identities

For years, banks have been trying to set up shared digital records of customers’ identities to keep them updated, however they’ve failed to find the right way to do it. It’s important for banks to hold verification of customers so that they don’t lose roles as trusted guardians for people’s money and to check that customers aren’t criminals or illicit actors.

Many believe that the blockchain could offer a great solution because of its cryptographic protection and ability to share constantly updated records with multiple parties. Dozens of start-ups are working on building blockchain systems for customer identification, which could be a big benefit for those who don’t have identity pages.

IMAGE: PEXELS

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