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Blockchain, besides its major application in the cryptocurrency development, may also be of great use for provision of credible solutions to financial institutions across the world in relation to fraud management and prevention.
Physical banks are still here and serve millions of customers, yet AI-powered mobile and online banking, fintech companies and open bank initiative and modifying the sectoring, transforming the banking experience once and forever. Open banking, for instance, is an advancement that gives clients an opportunity to share access to their financial data with non-banking third parties, mainly retailers and fintech firms. This allows the latter to use collected data in order to enhance user-experience and continue bringing innovation to the finance industry. Data analytics have also been a central element for banks, that also strive to further their omnichannel reach. Clients, on the other hand, have been expressing concerns about privacy protection, pushing the need for higher transparency of transactions for security breaches and scams prevention. Blockchain may become a solution to the issue and eliminate the existing concerns.
Blockchain has found application in many different sectors worldwide. In Australia for instance, the Commonwealth Bank was authorized by the World Banks to create the world’s first blockchain bond. The latter is mainly aimed at payments optimization between Europe and South America through the application of distributed ledgers. The People’s Bank of China has also moved forward, taking advantage of the new technologies, and has been testing a blockchain trade finance platform. Samsung SDS has announced the development of a blockchain-based certification platform for South Korean banks. At the same time, South African Reserve Bank has announced their efforts to create distributed ledger technology initiatives in compliance with payment regulations. The International Business Machines Corp. (IBM) has launched its first commercial blockchain deployment for the private equity market, created in collaboration with Northern Trust Corporation. All of the latter suggests the global application of blockchain and welcoming attitudes of governments and global companies.
Meanwhile, the BankChain community has been helping banks to effectively address issues of security. One of the solutions was the integration of corporate electronic-Know Your Customer (eKYC) platform. This is projected to increase the safety levels and maximize fraud-prevention efforts when it comes to cross-border remittances, creating bank guarantees and employee background verification systems. At the same time, the application of next-generation technologies increases the speed of cross-border transmittances, benefiting customers’ experience.
Governments need to back blockchain
The urgent need for regulatory authorities remains a great issue, calling for the development of a holistic ecosystem for API interoperability and a regulatory sandbox for banking institutions, which would help the latter to verify and authorize their blockchain solutions. Governments around the world have expressed high interest in blockchain’s potential, as well as a willingness to work on a legislative framework that would help discover the most of it.
Researchers and specialists stress the need for the creation of more exchanges for tokenization and cryptocurrency, which is supposed to attribute more stability to the concept of blockchain and cryptocurrencies in general, which will potentially hold stable values.
Blockchain is now shifting away from the volatile Bitcoin and is increasingly being called the potential cure for all banking ills. However, there is still a long way to go before blockchain consumers will build a stable trust towards it and welcome it to all spheres of human activity.