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For years now, financial professionals have been speculating about the potential of blockchain technology. Although it is already a buzzword, many banks are starting to invest in blockchain solutions, and more than 60% are planning on running at scale with it. It is clear that blockchain is poised to transform the way financial markets are conducted.

Blockchain technology is expected to become widely used in finance in the next few years. This article provides a comprehensive overview of how organizations can get involved in this emerging industry.

Blockchain in Financial Services

Although the term blockchain is commonly associated with Bitcoin, other types of financial institutions are also starting to use it. These include financial firms looking to make their transactions more secure and efficient.

A blockchain is a type of ledger that is used to record financial transactions. It is distributed and stored in various locations. Each copy of the log is then added to record the transactions. Due to the nature of blockchain’s multiple copies, it is incredibly secure and immutable. A hacker would have to change the entire record of the ledger simultaneously to prevent it from being stolen.

Common Blockchain Uses

The properties of blockchain make it ideal for various financial applications. It can facilitate transactions and build trust between partners. It can also be used to identify individuals using digital IDs.

Due to the potential of blockchain technology, several financial service organizations are currently using it to improve their operations. These include reducing fraud and improving the efficiency of their transactions. Other uses include cross-border transactions, clearing/settlements, digital identity verification, and trade finance platforms.

Blockchain and Compliance

Due to the increasing complexity of the regulatory environment, financial institutions must comply with the laws and regulations that apply to their activities. This is especially true when they operate across different borders. It can be very challenging for financial firms to keep up with the changes in regulations. 

Blockchain can help with that, as it offers compliance attributes (such as those mentioned above) and streamlined processes that enable automation and verification, aiding in oversight and fraud prevention.