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Blockchain act as a game-changer for the banking industry.
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Blockchain in Banking Industry Email Us : info@hbgknowledge.com
What is Blockchain? Blockchain Technology- • A blockchain which was formerly known as Block Chain is a list in which records are present in a growing nature known as blocks. These blocks are interlinked and each of them contains a cryptographic hash that is of the previous block connected to it. This hash is the key or password, a timestamp and transaction data is recorded in it. • As per Don and Alex Tapscott, the authors of the Blockchain Revolution(2016), blockchain is defined as the “incorruptible digital ledger of economic transactions that can be programmed t record not just financial transactions but virtually everything of value”. • Blockchain, in short, is a shared ledger decentralized and resistant to tampering which provides access to the verified contributors to store, view, and share the digital information in a secured environment. Email Us : info@hbgknowledge.com
The development of the internet might get compared as of that to the blockchain. The internet as it is has always been a boon factor for everything, be it a business or the whole market of social media and transactions. It has reshaped the lifestyle and businesses since the 1990s. • The blockchain, on the other hand, is also one such factor which takes reshape the whole perspective of the nature of business. • Not just this, it provides trust, accountability, and transparency when it comes to business relations for providing the aiding benefits. These benefits are adopted by companies and businesses, especially the banking sector to explore its ways of preventing fraud and gaining security. • Adoption of blockchain technology: • Blockchain technology has yet not been leveraged by the whole market, but those who use it have claimed the businesses to be a success after its adoption. • Blockchain takes the work further ahead of the previous and old formulas, driving the data and work forward with vigour. Email Us : info@hbgknowledge.com
Common Benefits of Blockchain: • It is the biggest provider of solutions related to trust. It prevents corruption of data in an agreed chain transaction. • It solves the issues of double-spending (a single transaction cannot get recorded twice). • Blockchain eliminated the need for intermediaries. • Provides a frictionless transaction. Email Us : info@hbgknowledge.com
Learn how Blockchain benefits businesses and transactions in the banking industry: • Blockchain acts as a game-changer for the banking industry, it not only prevents the frauds from happening by providing its high level of security, but it also allows them to perform and approve transactions in a matter of seconds. • Blockchain provides cutting cost majorly and boosting the efficiency of the banking sector. The smooth transaction is the added bonus provided by blockchain to the banking industry. • If each bank in the network had the copy of the ledger and a common protocol and consensus mechanism, it can benefit all the plus properties of the blockchain. • In short, Blockchain in banking sector offers lower costs, security, privacy, and speed. Blockchain provides profitability to the banking industry. Email Us : info@hbgknowledge.com
Ways in Which Blockchain prevents frauds in the Banking Indstry • Immutable • The data or transaction once registered on the blockchain can not be edited or changed in any way possible. The consensus is a term that provides the allowance and permits the validity of the data to be true and of required nature before the data is even listed on the blockchain to send forward. All the participants or respondents provide their consent before a data is set and transferred in the blockchain. • After the approval of the data, the block is provided with a timestamp before which is linked or connected to the previous block in the blockchain. • This process makes the blockchain data of consent and an asset from the very beginning. It can procure the data in terms of origin making it of protective nature which can not be undone however strong the fraudulent is of skills. Email Us : info@hbgknowledge.com
Distributed Networks • The blockchain includes a distributed digital ledger containing the data shared between systems and given consent on a regular basis. The central authority in this is missing and the data is sent forward with the consent ot everyone present in the members. • The management and authorization of the data that is forwarded is transparent leaving not even a single place for fraud. It is under the authority of the members to process, check, and verify from start to end. • This is not just the case of the current data being transferred or forwarded, but the data present in history also falls on the hands of the members. So, the changes to be done on the data needs to have access to the data and the access to the majority of the systems in the network is the toughest task and is considered as “out of the picture” question. Email Us : info@hbgknowledge.com
Permissible • A blockchain network is created on the base of the allowances and permits and non-permits depending on the type of blockchain creation. • The permission-based network of blockchain is one such network which prevents the frauds to occur as the data is completely under the control of the members present in making and moving the data. This even prevents the access of the systems present in the network and is also known as the private blockchain. Email Us : info@hbgknowledge.com
Types of Frauds • Identity Frauds • Considered as one of the serious and impactful issues, identity fraud poses a threat to consumers across the globe. Blockchain provides the security of the digital ID of an individual that makes it protective in nature without any proof of tampering. • As to the identification of the data is considered, it is kept in a permission-needed framework which only the authorized parties can access. In such situations, the authorized members can access a single version of the information/data and the verification of the data can be provided only the known members providing safety and validity to the data and its security. • - Email Us : info@hbgknowledge.com
Financial Frauds • The blockchain provides prevention against the financial frauds by providing a complex outlook to the transactions that are not easy in numbers either. The processes that make the transactions complex in nature are the need for settlements, difference in currency denominations, collateral requirements, etc. • The processes that are multi-staged in nature requires human interaction which makes it more difficult to break or alter. In such cases, blockchain helps in detection of frauds by enabling the sharing of information in real-time and providing updates ledger on the consent of the members in the party. These steps not only prevent frauds from happening but also puts the identity of the fraudulent on stake. Not just this, it even lowers the costs and time taken. Email Us : info@hbgknowledge.com
The Supply Chain Frauds • The supply chain networks are complex with huge number of people involved in the process and blockchain helps in preventing the fraud by providing transparent and easily traceable products. • Any process cannot be hindered without the verification and updates as approved by the members of the party. The digital adoption in blockchain provides tracing the products to the very origin. Email Us : info@hbgknowledge.com
Blockchain as a tool for financial and Banking Sector • A blockchain is a tool that works as an asset in preventing frauds to happen in the financial and banking sector. It provides high-level pf security and a complex transaction and number of users in order to make it difficult to alter or manipulate. • When the banking sector is on its hinges after various frauds and tamperings, it simply protects the core technology or transaction od any important data or information. • Blockchain provides lower costs, less time in transactions, and smooth transaction with high security to the banking industry by protecting it against frauds and threats. Email Us : info@hbgknowledge.com
The cost reductions bank would gain after the adoption of blockchain’s estimated by using the data used from McLagen’s research and surveying a number of investments banks. It presents the potential savings as the following- • 70% of savings would be done on central finance reporting, as a result of better efficiency, transparency, control, and data quality. • 50% savings would be there on business operations (trade support, middle offices, clearance, and settlements, etc) • 50% savings are to done on centralized operations (KYC, Client Onboarding), as a result of better data quality and mutual consent strategy of data among the members of the party.. • 30% to 50% of savings on compliance as a result of enhanced transparency and auditability. • All in all, from the cost base of $30 billion savings, investments banks would be able to save $8 billion correspondings to a total of 27% of cost reduction. Email Us : info@hbgknowledge.com
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