Banking is a sector that demands great security and data protection. As money moves increasingly digital, it needs security, privacy and transparency.
By using blockchain technology in banking, we can ensure that we have immutability, transparency and security over our finances. This does not only apply to cryptocurrency. Rather, blockchain can go a long way towards securing traditional money in the banking sector without crypto.
Why is blockchain useful in banking?
Blockchain can streamline the way we do payments across borders. Central and commercial banks are using blockchain technology to improve payments as well as potential implementing their own digital currencies (‘cryptocurrencies’).
However, we don’t need cryptocurrencies to give blockchain value in banking. Some banks are already using blockchain platforms to exchange traditional funds, and most banks have taken an interest in and are experimenting with blockchain technology.
While cryptocurrency has its own place in the way blockchain will change finance, blockchain platforms alone can provide security, optimisation and reduce costs for both banks and consumers around the globe.
How does it differ to traditional banking?
Traditional banking, while implementing a variety of security measures, lacks the comprehensive security of blockchain technology. Because of the way data is stored on the blockchain, no central intermediaries are required, and transfers are instant.
Blockchain is the natural next step in traditional banking. Some of the main advantages it holds over traditional finance include:
- Faster transactions
- Improved security
- Cheaper transaction fees
- No intermediaries
Blockchain technology ultimately lets you have more control over your own money and reduces unnecessary waiting times and costs.
Blockchain finance platforms can also help banks to approve and mediate loans easier than through traditional systems. Since there’s no need for intermediaries, this saves costs and also enables banks and consumers to have more visibility over where loans are going and how they’re being paid off.
Barclays, Santander, UBS and a myriad of other banks are already taking an active interest in blockchain in banking and implementing their own solutions.