Blockchain is a global, decentralized online database that anyone, anywhere with an Internet connection can use. When the concept of blockchain was first implemented in 2009, it was a key component of the digital currency bitcoin, where it accounts for all public transactions.
At first, blockchain was mainly used by common criminals for anonymous black market transactions, but with the rise of online digital cryptocurrency in the past decade, blockchain technology has been attracting a lot more attention from business executives.
Early forms of blockchain verified ownership of cryptocurrency, making it relatively hack proof and practically impossible for records to be counterfeited or altered by anyone. One CNBC reported compared the tech to a giant Google doc with the exception of allowing users to change or delete existing information.
Evolution and Improvement
Leading technology companies such as IBM, Microsoft, and Accenture are now investing in the evolution and improvement of these earlier forms of blockchain.
In recent years, a better understanding of the technology and how to put it to use has allowed them to stray from a blockchain that is reliant on the exchange of cryptocurrencies. These tech giants have been working to enable users to run highly secure blockchain networks for a variety of regulated industries.
Blockchain technology can be of assistance to any process that requires multiple agents to keep records and verify them against other party’s records.
While the range of potential applications for blockchain is broad, this type of technology is transforming the finance industry in particular.
Banks choosing to adopt blockchain technology are looking to move into the future and provide their customers with:
Decentralized trust allows banks and individuals to successfully process transactions while eliminating the middleman or a central organization. This alteration disperses authority among all the peers in the transaction chain, thus eliminating the need for a trusted third party.
Blockchain technology enhances security by making it relatively hack proof and practically impossible for records to be counterfeited or altered by anyone. The decentralized network reduces the risk of fraud since it is shared among a large number of users. This guarantees transparency between banks and their customers.
Decentralization allows banks the ability to decrease transaction fees significantly because the online database records the transactions on its own. Using blockchain also reduces material costs by cutting out the expenses associated with privately owned and controlled infrastructure. Blockchain makes payment processes quicker, easier, and less expensive for both the banks and their customers.
Blockchain increases banks’ efficiency by eliminating the risk of errors and duplication. By using just one publically available ledger, blockchain also allows banking processes to be fully automated, which qualifies transactions to be processed 24/7.
According to a study conducted at Deloitte, “With blockchain, moving money should be as easy as email. In 10 years, banks may look more like Apple, Amazon, and Tencent, coupled with access to tons of products and services within those ecosystems.”
In light of this, banks and businesses are now investing tens of millions of dollars into the innovative system. Banks see blockchain-like technology as suitable for areas of their businesses from trading to money transfers.
These companies are simply spending money to make money.
Proper use of blockchain technology is estimated to save banks up to $12 billion a year.
Stay Ahead of the Competition
The newfound clarity about the potentials of blockchain has attracted the attention of major International banks as well as US banks such as Wells Fargo, Barclays, and Santander, who are investing heavily in automation and artificial intelligence technology.
In fact, back in October 2016, Wells Fargo and the Commonwealth Bank of Australia were the first to successfully complete a cross-border transaction between banks using multiple blockchain applications.
“Existing trade finance processes are ripe for disruption and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies,” Michael Eidel, Commonwealth Bank’s executive general manager for cashflow and transaction services stated.
Since many banks hesitated to adopt this new technology at first, this was a milestone for the traditional banking industry.
ABOUT FSI TRANSFORMATION ASSEMBLY
With the rapid evolution and improvement of Blockchain technology comes a massive explosion in FSI digital transformation. This technology is helping develop unprecedented manageability for firms around the world in terms of organizing data, creating new customer engagement platforms, enhancing data security, and controlling the overall data volume.
C-level IT leaders in the financial services and insurance sectors are dealing with many challenges as digital transformation becomes an imperative. Understanding not only the convergence of Mobile, Social, and Cloud but also the possible implications of Artificial Intelligence, Machine Learning and Blockchain is vital to stay ahead of the competition. The future of online banking and the entire finance industry is fast approaching, and Automation, Artificial Intelligence, and Blockchain technology are transforming how banking is being done.
The Millennium Alliance is pleased to announce that application for our biannual FSI Transformation Assembly is now open! Seats are reserved for the C-Level executives leading the digital FSI revolution to come together on September 14-15, 2017.
Join experts from North America’s major financial services and insurance organizations like Keynote Speaker Scott Dillon, EVP, CTO and Head of Technology Infrastructure Services at Wells Fargo and Company. Scott will be providing unique insight into how his team provides availability, security, and global interconnectivity for the more than 70 million customers who interact 12 billion times a year in person through the company’s 9,000 stores and 12,000 ATMs, on the phone, or online at www.wellsfargo.com.
This is not just another “Financial Services” event. Spaces are reserved for the best in the business. Apply to attend here!