Blockchain is Poised to Change Financial Services, Here’s Why

The hype surrounding blockchain technology is ever-present no matter what the industry and the type of company it is involved in (regardless whether it is a corporation or a start-up). Amid all the excitement, it might be difficult for entrepreneurs and investors to determine what blockchain means for their businesses and investments, especially in the financial sector.

Blockchain is poised to create an environment where financial services must adapt and evolve, with several factors driving this evolution:

Unalterable Data

Data that is uploaded to blockchain cannot be altered without leaving a clear trail. Every block of the blockchain is assigned a date and time stamp, and blocks cannot be altered after being added to the blockchain.

Consensus Verification

For any information to be added to the blockchain network, there needs to be a consensus among members to approve this information. Information is verified by either via proof of ownership protocols or completion of algorithmic puzzles.

Real-time availability

Having information available in real-time, after being approved by members of the network and encrypted, is one of the most business-ready applications of blockchain. This combination or encryption, consensus validation and confirmation, and delivery of data in real-time represent a leap forward in data analysis.

This makes blockchain based investments highly favorable for international investors, given that it is highly safe and transparent.

There are several areas where further adoption of blockchain will facilitate the development of a more strategic finance industry.

Continuous attestation

With the encryption, consensus validation and timestamp security embedded on the blockchain, auditors have the ability to examine 100% of transactions. With data verified on a continuous basis, auditors can assist in data security policies, generate insights and link data to the decision making process.

Real-time settlement of exchanges

Even the most sophisticated mobile transactions that appear to settle immediately might actually take days or even weeks. Leveraging the blockchain platform with data instantly available to all participants would substantially boost efficiency and savings. However, it could also threaten the traditional role of intermediaries. While this eliminates some duties, it also opens the door to higher-level functions as opposed to the simple verification of identities.

3Smart contracts

Some of the most inconvenient aspects of today’s business landscape are related to contract execution and resolution. Integrating contractual terms on the blockchain would expedite contract execution and reduce the need for intermediaries. Banks can automate loan agreements and terms of payment using blockchain.

The traditional way of investment is permanently going to change as smart contracts become the mainstream norm. This will enable companies to cross borders and avoid lengthy amounts of bureaucracy, all the while gathering enough funds to make the world a better place.

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