Blockchain in the banking industry
The overriding banks and business entities’ goals are to maximize efficiency and profit. A measure of effectiveness arises as an operational and strategic one. Strategic efficiency is a search for new solutions, thanks to which you can achieve a competitive advantage. Operational efficiency means more effectiveness duties performance using the same technology as the competitors. Check out the advantages that blockchain in the banking industry makes.
Result of the implementation of blockchain in the banking industry
Blockchain technology will have a positive influence on the efficiency of work in strategic terms by creating new financial products. In the operational dimension, the form of change is to increase the speed of document processing in digital form and to reduce the number of paper documents.
What benefits result from the implementation of blockchain technology in the operational aspect? Mainly, it is increasing in transparency, security, and speed of data processing. These advantages are available thanks to the access to the registry, the inability to delete the operations performed, which allows blocking to keep undesirable. Furthermore, it is an introduction of a decentralized system that minimizes the risk of error during data entry.
Changes in documentation
One of the most important protection for sale and purchase operation is a documentary letter of credit containing descriptions of goods. This document goes to the importer’s bank and is a basis for payment. In addition, this is mutual protection against payment avoidance and the risk of receiving a defective product.
The whole process requires the exchange of documents in paper form, increases the risk of errors, extends the duration of activities and contributes to the increase in costs. The introduction of blockchain technology will eliminate these problems while maintaining the advantages of the letter of credit solution. Moreover, the transaction costs and the risk of errors will decrease, while the operational speed and security level will increase.
Barriers in banking industry blockchain
Disadvantages of such technology are primarily costs of implementation into the banking system and the use of energy. The success of the implementation also depends on regulatory conditions and adaptation in various organizations. The main goal of the work can be achieved when technology gains trust and is used on a daily basis. Despite these inconveniences, the advantages of blockchain technology are prevailing. Furthermore, they associate with a new approach to data storage, analysis, and processing. If the barriers are eliminated and the solution reaches a large pool of recipients, the potential of the blockchain will be used appropriately.
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