The world of finance is in a continuous changing. Consumers are becoming more demanding for ease of engagement and in the meanwhile financial institutions are under pressure to improve services using new technology.
It is believed that Blockchain technology can be used to create secure and convenient alternatives to time-consuming and expensive banking processes. And this theory seems to be gaining traction, as almost every major bank around the world is testing it. An example is that banks are trying to create systems that reduce the number of participants involved in transactions. But some have invested more heavily than others. Some are investing in blockchain startups. Others are partnering with FinTech companies that use blockchain
There are a lot of reasons why banks are using Blockchain but I am gonna give three important ones:
– Cost savings and efficiency: Blockchain’s strengths are highly attractive to banks, which are dealing with rising costs for maintaining or replacing their aging infrastructure and ensuring compliance with heavy regulatory burdens. Because of the increased economic instability, that banks have to deal with, blockchain-based solutions could generate cost savings of up to $20 billion per year, according to Santander.
– Competing with startups: Fintechs are using blockchain tech to offer services (such as remittances and international payments) at reduced costs, with greater speed, and with more user-friendly interfaces than major banks. As a result, banks have started to construct their own blockchain-based solutions to better compete with these up-and-comers.
– New business models: Banks can use blockchain-based systems deviate central bodies or legacy infrastructure (don’t forget that this was the original blockchain use case). Banks could potentially develop these systems to create brand new business models that disrupt the financial ecosystem.
It has come to an understanding that the technological potential of blockchain is enormous, and its uses will only grow with time.