Banks are a significant part of livelihood today. They provide vital services like storing, accessing, and transferring money from one account to another.
Banks use ledgers for recording all its transactions. These ledgers are physical or computerized and are available both online and offline. The blockchain technology is equivalent to this ledger but is poised on a digital platform, using a decentralized platform. This technology enables the storing and transaction of finances digitally. The use of a digital platform makes the banking processes more accessible and less time-consuming.
The elimination of a central authority to monitor banking operations dramatically reduces the chances of fraud and safeguards the customers. The decentralized network of blockchain does not allow any changes to be made in the data already stored. This makes data breaches negligible, and in case of a breach, the entire system can be shut down to prevent any further violation of data. The information stored through the blockchain applications are distributed over blocks and are interconnected. This ensures that no specific information can be breached or made vulnerable to banking crimes.
The KYC procedure employed in this technology allows the banking institutions as well as all the stakeholders to have transparent information about all transactions made at the bank. This prevents the possibility of identity threats. This system helps to efficiently monitor and verify the details of the users of past and future transactions. This allows convenient access to digital cash from any place, at any time. This mechanism adds value to a transaction and also promotes a sense of security while using a digital portal for transactions. The blockchain technology allows a two-way sharing of data between the developers and the users and enhances communication between all the parties involved. The banks also become better-equipped with practical solutions for a smooth workflow and help monitor the volume of transactions and carry out standardized regulations and reporting. Data management is also made easy with this technology as all assets are handled effectively to provide competitive services.
The dissemination of blockchain, growing popularity of cryptocurrencies, and the advantage of a decentralized platform allow the use of blockchain for several business processes, especially the banking sector. Major banks are successfully using the blockchain. These include JP Morgan Chase, Goldman Sachs, and the Bank of Montreal.