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INTRODUCTION
The financial transactions in the conventional banking system are regulated by centralized financial institutions. Whereas, with blockchain-a decentralized technology, transactions are encrypted and entered into a ledger, and also they can be shared with multiple participants. Let’s take a look at the benefits of blockchain technology in banking sector.
HOW BLOCKCHAIN TECHNOLOGY WORKS?
- A transaction is initiated, encrypted, and entered into a distributed ledger.
- The ledger is shared and multiple participants are given access to the ledger and they verify the transaction details without arbitrating the identities.
- The transactions that are verified are added as a permanent and immutable unit of the shared ledger.
- Finally, the transaction gets completed.
Since only the verified transaction blocks are added to the ledger, there is no need of re-examining the authenticity of any transaction.
BENEFITS OF BLOCKCHAIN IN BANKING
QUICKER TRANSACTIONS
- With the blockchain technology, instead of taking three days to a week to verify fund transfers, customers will be able to receive verification in hours or minutes and with the maturing of blockchain in banking applications, transactions will happen in real time.
- One of the key factors of the blockchain technology is the eradication of duplicate data. Even when multiple participants have copies of the shared ledger, they all have the exact same copy. There is no copy of the data other than the original location.
ENHANCED SECURITY
- Since blockchain allows quicker transactions than centralized systems, it is impossible for someone to change payments or record transaction information. There exists two security keys for each transaction - a public key (available to all users) and a private key (personalized users).
- With the public key, one can look into a user’s account balance and transaction details. The private key is a single-use module that is associated with the user’s account number. Even if a hacker steals & decrypt the private key, he/she cannot make further transactions.
IMPROVED DATA QUALITY
- Blockchain technology is capable enough to store any data and this data can be accessed and modified according to the preset rules. This tech is called Smart Contracts and is used to validate and enforce contracts automatically.
- When numerous data types from banks are moved into the ledgers, information acquires all the benefits of blockchain technology, along with the security features and quicker transaction speed.
Blockchain Firm is one of the pioneers that aids in implementing the blockchain technology in banking sector. Our services are reliable, trustworthy, accurate, transparent, and affordable.