This is part of a blog series Can Blockchain Save Our Financial System?
This blog examines the benefits that blockchain technology offers market data collectors in the financial, real estate and consumer marketing sectors.
To read the previous blog post about Blockchain Advantages for Rating Agencies, click here.
To learn about how Bloxable is building the most advanced debt platform using blockchain and smart contracts, visit us here.
The financial markets heavily rely on data analysis and forecasting techniques. Analysts and traders use the data to make predictions about stock prices, understand the trend of market movement and rate securities on the basis of risk.
The Blockchain Database has the potential to speed things up and reduce inaccuracies. Also, stock market analysis would be significantly enhanced by the application of the blockchain technology.
Some obvious advantages of blockchain for market data providers are listed below:
Disintermediation of Middlemen
Implementation of the blockchain to the financial services industry would remove the need for intermediaries such as custodian banks. This is because transactions on blockchain are completely secure and can be trusted for reliability resulting in a platform the lets sell and buyers to connect directly without a traditional intermediary. For example, in an ideal world, savers who have cash available would be able to directly lend to borrowers (without going thru an expensive, regulated bank intermediary that takes a cut). Removing intermediaries would reduce costs for the parties to a transaction.
Greater Transparency
The blockchain maintains a complete record of all the transactions ever conducted on the ledger system. This makes it easy for all connected banks and institutes to perform an audit and check the records. Greater transparency will lead to higher trust on the financial records.
Instant Transactions
Transactions could take days and weeks on the existing platforms due to cross-checking and verification between various stakeholders. Verification on the blockchain would take less than minutes as many intermediaries could be removed, allowing parties to deal directly with one another.
Reduced Risks
Blockchain would significantly reduce the risks for various parties as transactions are completed instantly and the likelihood that one party cannot meet its obligations is lowered.
Apart from the financial market data providers, blockchain also has a potential for implementation in the real-estate data gathering and consumer marketing.
Enhanced Capital Utilization
Realtors, lenders, title companies, investors and borrowers can all benefit from a robust system of market data collection and analysis. An efficient blockchain platform would allow lenders to quickly find borrowers looking to refinance their mortgage or take out their first home loan. The data would also allow lenders to find investors to offer packaged securities.
A blockchain platform would also be beneficial for borrowers to find better interest rates and terms of payment. An online system would give borrowers access to lenders from different states and even from other countries who may be offering better terms.
Investors connected to the blockchain would get a supply of liquid, mortgage-backed securities that can be easily sold off. As blockchain keeps a record of all the transactions that have taken place on a contract, investors can freely audit the whole record and find the process more reliable.
Customer Buying Habits
If you regularly shop at larger retail stores you have likely come across the loyalty and discount cards that are advertised to save you money on your shopping. Many people get these cards as they are able to save a small percentage on their purchases or accumulate points that can be spent for cash discounts.
These cards are operated by marketing data firms to create a record of shoppers’ purchasing habits and trends in the market. The database of purchasing information is used by marketers to design promotional campaigns, set prices and target customers better.
Loyalty cards aren’t just used by the retail industry. Banks are also starting to build a record of their account holders’ transaction history. Mobile and telecom businesses build a database of their subscriber’s cell phone usage to send out offers and new deals.
A blockchain-based data aggregation platform would allow data collection firms to customize the information that they choose to share (or not share) with marketers. This allows data collectors to ask consumers what information they are willing to share for market research.
Consumers would be more willing to trust and share their information when they have the option of choosing what information gets shared with marketers.
To read the next blog post in our series, about Blockchain Benefits for Government Agencies, click here.
