Table of Contents
Introduction
Hello welcome to today’s new topic which is how blockchain it transforming the banking industry. The banking industry is one of the undergoing a major transformation with the adoption of blockchain technology. It is a traditional banking system on the centralized authorized which can lead a in efficient high operation cost and also the security will unrealities. The blockchain is a can improve the transactions of banks and speed enhance the security reduced fraud and cut down the cost. And now today is blog is about exploring the how the blockchain works and its use in the secure transactions how the banks are adapting it challenging faced in its implementation and the future of the banking with the blockchain system.
What is blockchain and how it works
The blockchain is a decentralized digital ledger that can be records the transactions across the multiple computers in the secure and transparent manner. Unlike the traditional database managed by a single entity blockchain operates on a pair-to-pair network where every transaction is a verified and store in a particular depending on blog. The block is a linked to the previous one and forming a new chain of records that cannot be altered or deleted this block is ensuring the Data integrity and the security. This block can connect with the next block and transferring the data one to another and they all blocks are connected in a series sequence. Banking industry
There are such components of blockchain technology
- Centralisation in that case no single authority controls the blockchain instead of all the participant share the across to the distributed ledger.
- Transparency every transaction is recorded and visible to the all authorised participant it is mainly used for the reducing the fraud.
- Security the transaction are secure using the cryptography algorithm which is make nearly impossible to hack after a data transfer or Store.
- Smart control contacts the self-executing controls with the sum of the rules automate the transaction add there are enforcing the agreement without intermediately.
Working of blockchain
banking industry Transaction initiation a user initiated the transaction such as a financial transfer or the contact execution for the any payment or transmission.
the verification by a network the transaction is a broadcast to the network a computer notes which can the verify its other validity using the consensus mechanism for example proof of work or proof of stack
The creation of a new blog is used for a verified the transaction are group into a block and added to its existing blockchain
Security and block the new block encrypted and link to the previous blog and ensuring the security and preventing their new tempering. It is safe because of the previous block is now get updated data to the new connected linked block.
The completion of transactions are one of the added to the blockchain which is transaction is considered complete and immutable it means the after the transaction the data and the other details is immutable means unchangeable.
Use of blockchain insecure transaction
There are one of the best primary application of the blockchain in a banking is ensuring the secure and efficiency of transactions there are some component of blockchain which is enhancing the financial transaction.
Cross border payment in this type traditional intermediation international transaction tech several days due to intermediate arries and high fees. In this type the block in is eliminated the need for a third parties and enabling the instant and low cost cross border transaction. It is not a much more stick your but if you required it you can do it.
Fraud prevention with the immutable ledger blockchain prevents the unauthorised person and suspicious activity which can the reducing the financial crime. It is more useful because of it can locate the suspicious activities between the transactions of money one to another.
Identify verification the banking can use the blockchain to store and verify their customer identities securely and also improving no you customer KYC compilers. It is important to store a identify verification of customer because of without it the KYC and other things are not performed on their transactions.
Trade finance blockchain can simplifies and secure trade the finance operations and their process reducing the paper work delays and risk associated with their other international Trade
Landing and borrowing this is one of the smart contact automate loan agreement to ensuring the transparent and efficient landing process with minimum risk. In that case the customer care take any type of loan from the banking system on their account with their own risk.
How banks are adapting blockchain
Many banks are worldwide investing the blockchain technology to their modernise operations they can like other developed their own blockchain based payment system such as a j pm coin to facilitated fast and secure transactions it can also be a block in allows the banks to converter real word assessed into their new digital open enabling easier and the more secure trading.
Banks are adopting blockchain to reduce the time and cost involving in the clearing and settling financial transaction for ensuring the faster execution for that. Jara suno to banks are participating with the blockchain firms to improving there customer identity verification and reducing the fraud risk it is a main component for identification because of there are some of the fraud people who can take any suspicious activity at another account without knowing there real owner and the bank that’s why verification and identity is mandatory for banking system and blockchain best management.
There are some components and ways to integrating blockchain
- Digital payment and settlement there are a banks like JP Morgan and Citibank have a developed their own blockchain based payment system such as their jpm coin for the facilitated first and more secure transactions. The settlement is there on blockchain system base because this payment system is their bank and their own blockchain base payment system.
- Decentralized finance there are some of the banks which are exploring difi solutions to offer the finance services without the traditional immigration and also they can enhancing the efficiency and inclusivity
- Blockchain based identity management the banks are participating with a new blockchain firms for improving their customer identity verification and reducing the fraud risk it can make more logical and secure things in the banking management system because of it can have a new verification system for the analysing the customer detail and then after that any process can be started.
- Clearing and settlement system the blockchain can reduce their time and cost involved in the clearing and settling financial transaction for their ensuring faster execution. For that type of component it can every payment is transferred by 1 person to another within a second it is more efficient and secure thing.
- Regularity compilence the banks are using the blockchain to the enhancing the compilers with the regulatory requirement by the providing the transparent and auditory auditable transaction records. It can store the all records add other details of transaction.
- Toknization of assets there are blockchain allows the banks to convert a real word assist into a digital token enavelling the easier and more secure trading for that. Because in that token is not is hackable thing.
The challenges in the blockchain adoption
There are blockchain faces several challenges in the banking sectors
- Regulatory uncertainty many countries like clear regulations on the blockchain adoption for making it more difficult for the banks it is affecting on the implementation of the technology.
- Carable issues the blockchain security networks may experience some of the slow transaction processing speed especially the situation of the high volume banking operations.
- There are integrating blockchain requires the significant investment in the infrastructure training and the development it can be high implementation cost.
- Why the blockchain is secure vulnerability such as a hacking of a digital wallet and the private keys can pose risks it is one of the challenge for the blockchain adoption of security concern
The future of banking with a block chain
The blockchain technology is one of the set to revolutionize the banking sector further in their coming years there are some potential development includes in the below list
Central Bank digital currencies there are some many types of Central banks are exploring the blockchain based digital currency to enhancing the financial inclusion and monitoring the voices. It is useful because of the banks are exploring the blockchain and making a there new type of management for their currencies which can enhancing the policies.
Interoperability among the banks there are blockchain will be enable the seamless communications and the data is sharing among the financial institutions which can be improving the global banking efficiency in the transactions of money.
AI and blockchain integration will be enable the fully automatic banking services and also reducing the cost and human errors followed because of AI and machine learning can track the new features and managing the new blockchain based digital currencies for enhancing their financial inclusion and then it can also reducing the human errors.
Greater security and transparency there are some enhanced cryptography technology which can be make the banking transaction even more secure and the fraud registered it is more useful for the banking management system because of without verification and identification everybody can make a fraud in the banking system. It can make a big issues in this management Enhancing the cryptography technique will be make a banking transaction even more secure and fraud resistant we are the more financial products are agreements will be the automated through the smart contracts for the minimising the legal ad administrative cost this is a part of a smart banking contract management system
Conclusion
So in this block we are exploring about the how the blockchain is transforming the banking industries then in that case that traditional banking systems on the centralised authorities which can be lead to in efficiency security Vulnerability and high operation cost. The blockchain technology is one of the transforming the banking industry by providing the more secure transparent and efficient way to conduct the financial transaction. It can also reducing the fraud and improving the payment system to streaming compilers and enhancing The Identity verification.
The blockchain can also offers the numerals advantages for the banking sectors. There are however the challenges that as a regulatory on certain scalability and high implementation cost need to be addressed for the adaptation. With the continued advancement the blockchain will be likely become a cornerstone of modern banking the way for the decentralized and technology advanced financial ecosystem.