Transferring funds from a mobile phone to another with net banking or using mobile applications like ATMs, the technology when it comes to banking has revolutionised and become an inevitable part of our life as one cannot imagine living in a world today that has no innovations. Well, in such an era, the technology is facilitating everything that makes the banking sector more customer-friendly and one has to be
Financial institutes deal with a lot of data daily as well as transactions based on which various decisions can be made and the pattern can be observed. However, long gone are the days when these activities were carried manually and especially today as the population has raised and there are a lot of transactions happening, the technology is needed to facilitate this function.
Well, the technology can break down every financial transaction into encrypted packets or blocks those are to the "chain" of computer code and encrypted for enhanced cybersecurity. The email for money has been a key part of the IT innovations of the past decade in India and will continue to do the same. On January 2019, Institute for Development and Research in Banking Technology (IDRBT) division of Reserve Bank of India (RBI) came out with a blueprint of the blockchain platform for the banking sector and had no regulations on the adoption of the blockchain technology.
The top banks in the country launched their blockchain-backed loan systems including ICICI and Mahindra Bank. This was a significant move that allows the banks to have an efficient system leveraging the distributed ledger to ensure transparency in credit disbursement and also remove communication hurdles among various banks. For the customers, the technology allows the time saving by bringing down transaction time from hours to seconds.
To bring ensure efficiency, transparency, and security synonymous to the technology of Blockchain, the insurance firms are harnessing this technology to ensure better policy management, underwriting and quicker claim processing. In today's fast world, do you think that anyone has time to spare to avail the facilities and the BFSI sector has understood the same and allowed the technology to allow their facilities to reach their target audience?
For example, a web portal is formed to allow the customers to but the travel insurance and claim settlements in case of the flight delays. The blockchain technology enables the user to get notification about the payout eligibility in case of the flight delays and also helps the customers to have a transparent and efficient claiming process that allows informing better relationships for the brands.
The powerful technology enables the transfer of money electronically allowing the virtual currencies like the Bitcoin, Litecoin, and Dogecoin to become more open and secure. The technology is a spreadsheet or database inclusive of the transactions of the currencies mentioned above. This log contains the metadata about the details of the transactions and is publically accessible through APIs and torrent websites.
Although the SBI has imposed restrictions on such transactions and use of cryptocurrency, the Indian citizens are increasingly becoming interested in learning more about the phenomenon, as well as the underlying technology enabling blockchain-based payment solutions.
Allowing people in different geographical locations to have simultaneous access to a constantly updated digital ledger that cannot be altered, the technology can be useful when it comes to the current cross-border payments. The model of which lacks an international clearinghouse and relies on correspondent banks, which causes inefficiency, slow speed, and high cost.
An opportunity that is always solicited by the banks and the finance institutions of anything that can aid the reduced costs, is fulfilled by the blockchain technology as it reduces transaction costs and the amount of paper it takes to process. Cutting down both the transaction and processing costs, implementing blockchain technology has enabled banks to have a profitable and valuable solution.
Decentralising the transaction from the central authority to everyone involved in the process including the respective banks with the ability to access a single source of information and allows them to track all documentation and validate ownership of assets digitally, as an unalterable ledger in real-time.
Further, the technology with the positives allows the financial world to be protected from frauds, customer due diligence with the KYC to access the verification details of a client by another organization, a simpler clearing and settlement process, and momentous changes in the trading platforms with the risk of operational errors and fraud highly reduced.