Why do we need a blockchain bank?

Although many people might still believe that Blockchain is new in the world of tech, tech geeks know that it is not a new technology anymore. The normalization of the technology with effective implementations and real-world applications of the technology are testaments of the tech world accepting the prowess of futuristic technology. In recent years, blockchain has made a name for itself with its tremendous innovations.

In today’s world, the first word on the tongue of all investors and businessmen is blockchain, cryptocurrency, and NFTs. Blockchain technology is serving organizations with its best services and helping them to operate more efficiently, accurately, secure, and cheaply.

What is Blockchain and How Does it Work?

Blockchain technology focuses on the concept of a decentralized and distributed database. It thrives on the mechanism of different nodes where each node stores data that is accessible to all the users from any place and any device at any point in time. It stores information in a digital format and allows seamless accessibility.

Blockchain provides you with accuracy, security, and transparency in your transactions. It generates the records of your assets and trust without the involvement of any third party. The blockchain stores the data in groups known as blocks. When a single block space is full, then it is linked to the previous block of the owner. In this way, a blockchain forms.

List of Top Blockchain Platforms to Explore in 2022

  •     Quantopay,
  •     EOS,
  •     Ethereum,
  •     Hedera Hashgraph,
  •     Hyperledger Fabric,
  •     Hyperledger Sawtooth,
  •     Klaytn,
  •     Stellar,
  •     Tezos,
  •     Tron,
  •     XDC network.

How can Banking Benefit From Blockchain Technology?

Since blockchain technology is a distributed ledger that stores the fact of who owns any particular property and asset, it has great applications for the banking sector. In recent years the banking sector has taken the lead by implementing blockchain technology.

Blockchain technology is more secure and transparent for banking purposes. It connects different groups of people with them so that they can trade with each other seamlessly. The main feature of this blockchain technology is the decentralization of existing systems. Here are some interesting use cases of blockchain if we implement it in the banking sector:

    Better Clearance and Transfer System

Transferring money around the world is a logistical challenge. Since blockchain technology is a distributed ledger, it can effectively improve your process of money transfer and settlements. As our existing bank transfer protocols require a day, or in some cases a few days to settle the amount because of our financial structures.

Transferring money needs some intermediaries during the transfer process such as the involvement of custodial services to ensure that the transactions can be verified. For instance, if you want to send an amount from the U.S. to a bank in Germany then you have to interlink with the SWIFT members.

SWIFT just processes your payments centrally and the actual transfer will be done by the members which consume a considerable amount of time and additional cost. Hence, blockchain technology decentralizes the money settlement and makes the transactions direct. In this way, banks won’t need to rely on the custodial services data as the decentralized ledger of transactions keeps the payments records transparent publicly. The successful implementation of blockchain technology in the banking sector will work as a seed for a truly sustainable financial future.

    Blockchain Banking in Accounting and Auditing

Accounting is one of the areas in the banking sector that still awaits complete digitalization. As there is some strictness in the rule and regulations of data integrity and validity. That’s why accounting is another potential area where blockchain technology can be used.

Blockchain technology will work in a way that, instead of keeping separate records along with the transaction receipt it will directly add the transaction record into the joint register. In this way all the entries and number of transactions have been distributed and accessible to all the users. This will make the accounting and auditing direct and secure.

    Digital Identity Verification in Blockchain Banking

Banks are unable to perform or allow any online transaction without the identity verification of the user. They must go through a verification process that includes several steps that are disliked by most users. These steps include face-to-face checking, authorization, and, in some cases, authentication forms. However, we can’t deny the fact that these steps are necessary for every new service provider.

To counter this repetitive process blockchain provides a solution that will make it possible for the users to reuse their verified identity for other security purposes. One of the popular innovations in this verification area which is used by many foreign countries and large corporations is the Zero-knowledge Proof.

Once you store your identity on the blockchain, there is no need to repeat the process. Only you will choose with whom you want to share it. It also ensures security. This would allow the users to cherish the freedom of performing their banking activities without having to verify their identity every single time.

    No Third-Party Involvement in the Buying and Selling of Assets

Buying and selling any commodities, stocks, assets, and debts are based on the whole information of the owner. A traditional exchange market involves many third parties in the buying and selling of assets. Middlemen who are involved are brokers, security depository, custodial banks.

The involvement of the third parties makes the whole process slow that they have to verify owner certificates and authentication from them. To overcome all this, blockchain will revolutionize the financial markets by introducing decentralized ledgers of digital assets. It allows you to transfer the rights of an asset through cryptocurrency tokens.

Different fintech companies such as Quantopay are  utilizing the factor of transparency and seamless integration of fintech solutions based on blockchain technology for businesses to cement their place in the financial revolution that is to come in the next few years when blockchain finally takes over the entire financial system.

What are the Benefits of Blockchain?

Businesses use blockchain technology to share information that will only be accessible to authentic users. The overall network is controlled by concerned authorities that can allow and take the privileges back from the users.

Blockchain is sometimes called the trustless network, not because the partners don’t trust each other. It’s so-called due to the absence of the need to trust because of transparent technology. Here is a list of some detailed benefits of using blockchain technology:

    Automation

Through blockchain, transactions can be fully automated by the concept of a smart contract. Users just have to enter some personal required information then the process will get triggered automatically. This makes the process fast and efficient. Smart contracts are the latest innovation of blockchain technology which cut down the interference of third parties and further minimize the processing time.

    Enhanced Security

Blockchain assures the security of your data. Blockchain knows and understands the sensitivity of your data. Blockchain technology helps you to prevent any hacking and fraud by making the transaction end to end encrypted. In the blockchain, the data is saved on different servers not on a particular server so it is difficult for the hacker to find out the one.

    Great Speed and Efficiency

By blockchain, the transaction process becomes much faster and error-free. As compared to the traditional ways where the processes are time-consuming involving lots of paperwork and human error, blockchain implementation saves you all kinds of overhead trouble.

    Increased Transparency

Traditionally, organizations used to store data and information in separate databases. On the contrary, blockchain automatically stores data in the form of blocks on a decentralized ledger that is accessible to anyone at any point in time. The whole record of the owner and the history of its assets is transparent to everybody. Through this transparency the user can easily spot all activities or if any fraud happens.

    Instantaneous Traceability

Blockchain creates an audit trail of each asset on every step. To monitor the liquidity of the asset, it traces its whole journey. It provides the buyer with the rest of the history, weaknesses, and other faults of the asset. Through the traceability feature, it exposes the asset supply chain.

Many fintech experts still believe that blockchain technology needs more improvements to be fully implemented in financial measures on national and international levels. It needs to fulfill certain conditions that will pave the way for it to become a mainstream choice in the banking sector. Emerging Fintech Industry leaders such as Quantopay are working tirelessly to solve problems associated with the old-fashioned and outdated banking system. 

Currently, the technology’s biggest challenge is to develop a proper global infrastructure using the relevant solutions to prove that it can be trusted as the replacement of the current system. It is safe to say that blockchain can easily disrupt the current banking sector by providing a bucketload of facilities and convenience that is absent in today’s banking world.

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