For the last two years articles have been talking about how blockchain will transform both the banking industry and people’s lives. However, there have been few, if any, practical examples of where and how this will actually occur.
In any battle, being adequately armed is crucial to winning. Banks, faced with an onslaught from fraudsters intent on breaking into customer accounts, have no choice but to stay one step ahead with the latest in innovative fraud-protection financial technology; this is essential not only to keep losses down but to retain customer trust.
Blockchain has the potential to revolutionize operations for banks, from reducing costs to beefing up security to satisfying regulations more efficiently. But first bankers must understand how this ground-breaking technology really works and how they can adopt it to better serve their customers.
“This time is different”. The four most dangerous words in investing are normally whispered at the peak of a bull market. Said as a caution on a downswing they are not quite so dangerous, and amid regulatory, market and technological disruption, banking really is changing markedly in a way from which we see little prospect of a return to the earlier status quo.
Trade is the growth engine that empowers the world’s economies. Although circumstances such as the shortage of available trade finance to SMEs limit its operation, other factors such as technology, global governance and education are energizing its transformation into a vehicle carrying the world on an exciting journey toward shared global prosperity.
Blockchain, the technology underlying bitcoin, is poised to enter the mainstream with about 30 medium and large banks planning to put it into use by 2017. Applications range from reference data (real-time sharing of information about transactions within a bank and with external parties), retail payments, consumer lending and trade finance.
The so-called Fintech Revolution has drawn much commentary from the media and filled bank managers with dread of the threats posed by new fintech challengers, but is it really all that revolutionary? Even if it is not, progress is being made toward a more open financial sector that fosters healthy competition and innovation.
The transaction sector will never be the same; financial technology has permanently altered the way payments are processed. But the fintech revolution is not merely a retail-banking event; it is also set to transform the corporate-payments space—and forward-thinking banks are ensuring that they stay in the lead through digital innovation.
Blockchain, the decentralized, distributed database underpinning bitcoin, offers something for which financial institutions and their customers yearn: the security of transparency and immutability. Blockchains produce an information record that is carved in technological stone—and many innovative banks are embracing this opportunity to render their transactions safer and smoother.
As banks deal with the growing burden of re-regulation, fintech firms nimbly exploit financial technology to not only meet consumer needs but also create opportunities for spectacular returns. Keeping the mid-80s Big Bang twin vision of financial technology and deregulation alive, they gallop ahead into the future.