The impact of Blockchain revolution in the Financial Sector

blockchain in financial sector

It would not be wrong to say that the financial sector has entered into a new digital era with the advent of “blockchain.” This new technology is poised enough to redefine how we think about monetary transactions and has a scope to revolutionize the economy as a whole.

Of all the new technologies that have surfaced in the financial sector in recent years, blockchain technology stands out to be the most promising one. It powers decentralized cryptocurrencies, and the most famous (or infamous) and the flagship cryptocurrency ever invented is called Bitcoin which came into existence in the year 2009.

Cryptocurrency is a digital currency based on BlockChain technology. Encrypted blocks of data are accepted as currency or as a monetary unit. The creation of units and verification of funds transfer is done with the help of advanced encryption techniques. The underlying BlockChain infrastructure ensures that the users can edit only the parts of the blockchain which they “own” by virtue of owning the private keys that are required to write to the file.

Read: BLOCKCHAIN AND ITS IMPACT IN THE HEALTHCARE INDUSTRY

 Although the technology sounds to be a game changer, however, there are still many obstacles to overcome before it completely transforms the modern banking and finance. Many big financial institutions are willing to invest millions in research on ways to implement it. It has said that the blockchain technology has a potential to disrupt the financial industry.

Let us look at some real-world examples of blockchain which have started to make some serious headway in the financial sector.

Speeding up international payments

Ripple

There was an announcement by Ripple couple of years back that some banks such as CIBC, Santander, UBS, UniCredit, National Bank of Abu Dhabi have made a breakthrough by moving real money across borders with the use of blockchain technology.

Ripple is a blockchain startup which focuses on providing this technology to financial institutions so that international payments can be made more efficiently. The company offers a solution that provides a cryptographically secure end-to-end flow of cash with instant verification of the transaction.

blockchain impact on financial services

How Santander bank used blockchain technology?

This renowned UK bank has become the first major bank in the country to use blockchain for international payments. The bank has created an app (powered by Ripple technology) which is based on blockchain technology that facilitates global payments. Once the user downloads and installs the app – all he/she needs to do is to complete their profile details. And immediately they can start transacting internationally in a secure and completely private manner. The app connects you to Apple Pay, where payments can be confirmed securely by using touch ID. The transactions can be as small as 10 GBP to 10000 GBP any time of the day. It supports major currencies like US Dollar, British Pounds, and Euros. No matter what amount or currency is used – the funds are transferred between the transacting parties within one business day.  Thus saving a lot of time on transaction processing!

Smart Contracts to trade derivatives

The Smart contract is one of the most promising applications of blockchain technology. It allows execution of commercial agreements and transactions automatically. These smart contracts are secure than the traditional contract and can also reduce the transaction costs since blockchain cuts out the middlemen.

Barclays bank tested a way to trade derivatives by using smart contract. The bank created a smart contract, in simple words an electronic document where fields could be pre-filled with values as agreed by ISDA. In a way they attempted to standardize the documentation needed for these type of transactions –  thus reducing delays and human intervention. So the banks involved were able to fill the fields with the terms as defined in derivatives agreement and were able to view online. This helped in speeding up the process as banks earlier used to search for an old version of the draft in their inbox or piles of documents to make a new one.

Barclays used Corda blockchain for this trial which was developed by a consortium of big banks including Citigroup and JP Morgan. It was the first time that the Corda blockchain was used in a public trial.

The scope of Blockchain in the financial sector

Though the current use of blockchain technology is mostly seen in the Bitcoins, however, many banks are willing to experiment with this new technology. The initial focus is on payment settlements, trade finance, and reconciliation. Here, are just a few ways in which we feel that Blockchain has a scope to flourish.

Fraud Reduction

Despite being a new technology, blockchain’s potential to reduce the fraud in the financial sector is gaining a lot of attention. Most of the banking systems are prone to cyber attacks since they are built on a centralized database which makes it more vulnerable. Whereas blockchain is a distributed ledger where there is a timestamp on each block and the batches of individual transactions are held with a link to a previous block.

blockchain finance industry

KYC

Financial institutions spend huge amounts on the upkeep of the Know Your Customer regulations. The KYC intends to reduce money laundering and other criminal activities by giving banks a means to identify their customers. Blockchain aims to allow independent verification of a single customer by one organization which further can be accessed by all other organizations. This saves the hassle to the consumer of going all over again with the KYC process.

Trading Platforms

Blockchain-based technology can definitely help in reducing the risk of fraud and operational errors. The Australian Securities Exchange and NASDAQ are already looking out for blockchain based solutions to improve efficiencies and reduce costs.

blockchain in financial services

Insurance Sector

Insurance is a binding contract between two parties which involves number steps such as premium payments, the filing of a claim, investigation, and settlement of claims. Blockchain technology may change the way of insurance business runs by replacing legal contracts with smart contract and by using the distributed ledger system. Another way it can help is in settling unclaimed files since the blockchain registry will help in connecting the dots.

Conclusion

Banks have to deal with numerous transactions every day and Blockchain technology has the potential to bring in more security and genuineness in these day to day banking transactions. It can give an opportunity to the financial institutions to win the confidence of customers since it can make the processes simplified and transparent. We can easily say that Blockchain’s capability to reduce the risks and frauds will spike its demand in future thus making it as the new buzz word in the financial sector.

Blockchain And Its Impact In The Healthcare Industry

Blockchain in Healthcare sector

The 21st century is the era of information. It is called so because knowledge rules the world today. As the antagonist of the popular TV series Sherlock Charles Augustus Magnussen rightly put it, “Knowing is owning.” This knowledge is the Ultimate commodity, and the internet is the ultimate marketplace. And Cryptocurrency is the manifestation of Information; Encrypted Information in the form of currency. Bitcoin and its competitors in the field of Cryptocurrency are all encrypted data which are used as currency on the online platform. The value of this currency is not associated with any real-world asset and is fully virtual, based on trust. This trust springs from guarantees of authentication (proof of identity) and authorization (proof of permission). The transfer and trade of Cryptocurrency are conducted online and hence can be recorded and stored. But what most people do not realize that the underlying technology behind the BitCoin phenomenon is Blockchain.

Simply put, Blockchain is an electronic ledger. The function of Blockchain is to be a platform where trade and exchange information can be stored. This trade need not be financial but can be virtually anything of value. The records of the transactions are kept in such a way that it is incorruptible and transparent. The critical features of Blockchain which make it an efficient and trustworthy storage space are as follows.

  • The data is stored in a shared database with no central or master copy, which makes it nearly impossible for a hacker to corrupt.
  • The data stored is regularly updated and tuned by multiple users.
  • This information is public, which means anyone on the internet who has proper credentials can access it.

Read: MAKING SENSE OF THE BITCOIN PRICE FLUCTUATIONS WITH BOLLINGER BANDS

Blockchain

These features make it the perfect platform for any kind of record keeping. This is the reason why BlockChain can be relevant any and every sector, be it Business, Logistics, Manufacturing, etc.

Every industry needs some database in which a business can enter, store, edit, and manage the information related to their work. At a later point in time – they can effectively access it from multiple points so that the communication becomes more competent.

But particularly in fields such as Healthcare and Government, where the Public is also is at stake, the addition of Blockchain serves another equally important purpose, which is Transparency. The inherently decentralized nature of the storage process ensures that the Information that is stored in these secure ledger is incorruptible by any one individual or group. It also enforces that the information stored in this network is adequately verified and authenticated. In addition to that, the data is accessible to the public, provided that there are laws in place to govern that, and proper identity confirmation is carried out. This will ensure that anyone can access this information, and whoever obtains this information can verify its authenticity and completeness. What this translates to is that that we can assign different access levels to varying levels of hierarchy. The public, the doctors, the pharmacists and so on can have different kinds of authority regarding access and modification of the data stored.

Blockchain And Healthcare – Impact Analysis

Coming to the use of Blockchain technology in the Healthcare sector – a new breed of applications is bringing ease of access to information regarding Drugs, Pharmaceuticals, and Medical Procedures to everyone involved, thus bringing transparency throughout the patient care lifecycle. It also includes making collection, organization, revision, and verification of the data easier. By using Blockchain technology, the information regarding Healthcare like Drug sales, Health records of all patients, Details, and specifications regarding Medical procedures, Hospital log, etc. can be stored in a decentralized Database based on interconnected networks of personal computers. These computers can be used as terminals to access, edit, and update this information, given that they have the proper credentials and authentication.

Read: TECHNOLOGY AND EVOLUTION

Blockchain And Healthcare – Impact Analysis

The use of Blockchain in Healthcare industry is already disrupting it. Since it is only in its infancy – it is not hard to stretch your imagination and realize that blockchain will revolutionize how we care for the unhealthy. Currently, a lot of problems prevail in the field of Medicine because of a lack of uniform, a reliable and transparent method for storing and retrieve sensitive information. Issues like illegal drug sales, improper treatment, shady deals between doctors and pharmaceutical companies etc. are a can of worms. And Blockchain can be efficiently used to tackle these dilemmas.

Private health records of a patient could be made available instantly and securely to all doctors in all hospitals, making treatment more accessible, especially in case of emergencies. Information about the patient’s demographics, health records, and treatment history is critical to ensure that the best possible care is given to the patient. All these essential workflows will become easy and secure with the use of BlockChain, which grants doctors and other officials with the proper credentials to access, modify and monitor these records.

Drug Tracking, the sales of Drugs and Pharmaceuticals from manufacturers to retailers, is a chain where a lot of problems happen, like illegal drug sales and defective drugs. Using Blockchain to oversee this pathway can help ensure that the drug that is being sold is legal and trustworthy. It also helps to trace a drug back to its sellers and manufacturers in case something goes sideways. The end to end tracking and auditing ensures accountability. It also ensures that the market doesn’t get contaminated with defective goods.

In Research and Development of new medications and medical procedures, the storage and flow of information is an integral step. By using Blockchain instead of conventional means, the data stored can be verified by experts and stored without fear of corruption of this information by any party. This guarantees authenticity in the new products and procedures discovered, as the development of these were wholly transparent and tamper-proof.

medication and genomics

The same database can be used for patient-specific medication and genomics. It has been theorized that depending on the genetic makeup and traits, every individual has different specifications and requirements in medicine. The storage and flow of such information can be done using this technology.

What we talked about above are just a few use cases of this fantastic technology. There are many more, like Electronic record keeping, easier access to information for the public, effortless tracking of the Medical Sector by the Government, etc. The possibilities are endless.

The Verdict

Blockchain itself has many advantages as a network for Data Storage and Analysis, as it is a system open to all computers connected to it. Effectively decentralized and super-fast, it is the perfect entity for a ledger. The age of information is upon us. And this system has the potential to act as the Heart and the Blood Vessels for data to flow. It is a means for effective and continuous communication and data transfer. Blockchain in Healthcare systems will make our lives a lot easier, and there is lots to be conquered.