Blockchain is a new technology that is known for its use in cryptocurrency. Blockchain offers many advantages, which is why it is being used in many sectors. The banking sector has also adopted blockchain thanks to the tamper-proof features it offers.
The use of blockchain can revolutionize the working of banking voiced Bahaa Abdul Hussein. Bahaa Abdul Hussein lists out the benefits a below:
Reduces fraud and improves security
The biggest benefit blockchain offers the banking sector is fraud reduction. Security problems due to fraud has affected the banking industry from a long time. Blockchain implementation creates a clear audit trails. This ensures once information is updated, it cannot be altered. This prevents possibility of fraud. The blockchain network is spread across thousands of computers. This prevents an attack at a central point in the network, thus ensuring greater security.
Allows faster transactions
Banking transactions can be carried out faster when blockchain is used. This is especially useful for international transfer of funds. The time take for international transfers can take many days due to the involvement of third parties. When blockchain is used, peer to peer transaction is possible. It increases speed and reduces costs for the sender.
Helps in reducing costs
The use of blockchain technology helps to reduce costs for both banks and customers. Implementing blockchain allows banking services to be more efficient. This translated to cost savings. Blockchain facilitates automation, which again helps to save costs. Blockchain also allows middlemen to be eliminated from the system. Parties can directly transact with other, which leads to reduced costs.
Helps in error reduction
When the banking system is managed by people, there is always the risk of errors. These errors can be costly and can create problems for the banks and customers. It also gives rise to fraud, which is a serious concern for the banking sector. The use of blockchain ensures all transactions are recorded automatically. The transactions cannot be modified later. This minimized errors and makes the system more efficient.
Makes lending easier
Lending is one of the key activities done by banks. This vital process needs to be done in the right way, which is where blockchain can be helpful. The use of blockchain enables automation, which leads to quicker transactions. It helps in ensuring quick settlements of transactions, so the borrower receives the money immediately as soon as the lender approves it.
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