With the presence of physical banks, artificial intelligence powered chatbots and voice bots, financial technologies, banking payments and open banking initiatives are slowly taking the banking sector to a whole new level.
With more digital initiatives taking place, things may look to be less transparent to the end user/customer. The data is often held with the authorities of the particular segment. Hacking a central hub of data, becomes significantly more probable and lucrative.
The main technology behind which can help solve this is called Blockchain technology. Many financial products such as Cryptocurrencies use this technology, which eliminates the need for a third party verification, thereby improving the overall efficiency and strengthening of security. This technology significantly helps to reduce financial frauds and mitigate the risk of handling transactions in the digital world.
Establishing trust and reducing cost in cross-border transactions remains the underlying objective of the creation of Bitcoin. With blockchain technology, the cryptographic hashing and mining to secure bitcoins, ensure that they can be transferred from one place to another within seconds. This improves speed and scalability which are the main advantages of using a blockchain.
Global Acceptance of Blockchain
In the first week of September 2018, CSIRO’s Data61 group, law firm Herbert Smith Freehills and IBM (NASDAQ:IBM) entered into an agreement to build a blockchain based smart contract platform dubbed the Australian National Blockchain. In August, the World bank mandated commonwealth bank of Australia to develop the World’s first blockchain Bond. It is named as the Kangaroo bond or bond-i, the foreign bonds which are issued in the local currency.
Grupo Santander (NYSE:SAN), the largest Spanish banking group which is controlled by the Banco also implemented a Ripple powered One Pay FX payment system with underlying blockchain technology. This technology allows international money transfers within one day having currently 4 countries using the platform. It has been developed with a primary objective to make efficient payments between Europe and South America with the use of distributed ledgers.
On 4 September 2018, Shanghai Stock Exchange announced that People’s Bank of China was informed about the trail operation of the “Bay Area Trade Finance Blockchain Platform”. Enterprises were allowed to do trading and financing activities on the platform including various scenarios like accounts receivables and trade financing. It was noteworthy that the Bay Area Trade Finance Blockchain platform can help solve the financial difficulties of Small and Medium Enterprises, help banks to conduct business authenticity audit and overall reduction of cost.
A subsidiary of South Korea’s Multi-tech group – Samsung SDS (KRX: 018260) last month declared the development of blockchain-based certification platform for South Korean Banks.
South African Reserve Bank recently launched Project Khokha which test distributed ledger technology initiatives that abide by the formalities of payment regulators.
Bank Hapoalim, Israel’s largest bank (OTCMKTS:BKHPF) entered into a deal last year with Microsoft, to create a digital bank guarantee which is based on blockchain technology.
In 2017, 28 Indian banks including State Bank of India, ICICI Bank Ltd (NYSE:IBN), Kotak Mahindra Bank Ltd, HDFC Bank Ltd and Yes Bank Ltd come together to build blockchain based solution community called BankChain.
Over the. The bank chain group has helped Bank to spot problems like setting up of an integrated corporate eKYC platform, vendor rating and a blockchain-powered register that records hypothecation, lien, mortgage, pledge, etc., on movable, immovable and intangible assets.
It also points that along with the elimination for the need for moving paper across countries, it also discards the need for financial messaging between banks and introduces the convenience of instant cross-border remittances for retail customers.
Government-Backed Blockchain Technology
The government is fully into becoming a blockchain hub for the future World. It has taken it as a part of their smart Dubai project. They have partnered with IBM for Hyperledger and with ConsenSys for Etheruem. Dubai wants a beautiful and best combination of the portfolios of IBM and ConsenSys. The Government has around 20 Use Cases which some to be fully implemented by 2020.
China plans to create its own cryptocurrency. The government do not want any other cryptocurrency to run in its economy.
CrimsonLogic, a Singapore-based e-government service provider owned by a government agency and a major port operator recently in July 2018 declared the launch of a cross-border trade product with underlying blockchain platform.