Blockchain and Banking
Blockchain is set to radically change almost every industry, and this series of blogs is examining just a few of the many ways this new technology is giving an impact on our society.
One of blockchain technology’s main strenght is permanence and it’s speedily making a huge impact on the data-based banking sector with information stored using an immutable, unchangeable ledger.
Clearing and settlement are two other strengths. Every year banks spend billions managing the complex global web of loans and payments, but thanks to blockchain this is rapidly beginning to change. Because of the distributed nature of the technology, every participant shares a copy of the same single database. It’s a design that eliminates many of the limitations and inefficiencies of a traditionally structured system. Banks are always on the look out to improve and they quickly recognised the advantages of blockchain and became early adopters. It has become the reason for many banking networks now being streamlined and secured, including prominent clearing houses such as Deutsche Börse and the Australian Stock Exchange.
Another striking example is the phenomenal impact the technology has had on identification systems. Identification is an area of vital importance — without strong verification, institutions can fall victim to fraud. But what exactly does blockchain offer?
Because blockchain technology is immutable, meaning there’s no way to change or modify them once broadcast to the network, they make an ideal candidate for the storage of highly important information, such as identity verification. Using the technology, banks can rest easy knowing that databases of their clients they build are both accurate and untampered with, and share the information with other institutions.
The technology has brought banks significant savings and it also saves their clients the hassle of having to go through lengthy verification processes multiple times. All this, and we’re still in the early days of understanding the potentials of this new technology.
Join us next week for another close up look of the impact of blockchain, in the next post we will be looking at global shipping.