Banks are controlled in all jurisdictions as everything they do is about the money that belongs to the people. The blockchain technology can enable banks to provide seamless customer experiences with cryptocurrency.
Banks like UBS are looking to integrate blockchain technology to streamline their payment solutions for cross-border settlements and utility solutions. The banks can save a lot of money, as they will cut out agents and commissions. Banks are investing in solutions by startups which are developing projects based on blockchain technology as they notice the potential of this technology. While this technology can disturb the way in which clients do their businesses with each other, it can bring in many differences concerning the speed of transactions and their costs.
The banks can save the charges payable to agents and clearing houses. Blockchain is an excellent solution to minimize operating costs. Banks can thus invest more in invaluable projects. The clearance transaction time is more when compared to blockchain-based inter-bank transactions. The blockchain technology will provide banks with efficient payment mechanisms, where inter-bank payments can happen in minutes in a secure ecosystem at a lower cost.
Blockchain is being examined with fixed interest by banks to improve their settlements within their own branches and with other banks, precisely to improve intra-bank and inter-bank transaction standards. Robust anti-money laundering procedures and know-your-client norms are made mandatory concerning blockchain transactions, thereby avoiding the unauthorized use of this technology by money laundering supporters.
Bringing in procedures to prevent money laundering is one of the biggest challenges faced by the banking industry. Testing client identity and the purpose of the transaction is required to avoid the financing of terrorist actions. There is an absence of uniformity in standardization procedures and policies meant for verifying the identity of clients and the purpose of the transactions. The verification process here for each request seems to be time-consuming.
Having a permanent ledger that records verified IDs of those behind every electronic transaction can act as a massive obstacle to money laundering. Since the ledger would be unalterable, it would provide definitive proof in a court of law of a person or a company’s involvement. Any blockchain-based database that requires money or property could be programmed to record a documented identification of each person for each transaction. Users could then be held responsible in the case of any wrongdoing.