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Summaries for the past few years. Charged with multiple applications and multiple applications across industries, this technology is gaining momentum with traditional venture funding up year-over-year. According to Netscribes research, the global blockchain USD 4.65 billion by 2022. North America currently leads the race with the largest market share, thanks to the immense industry funding for technological developments in this region . APAC is expected to account for the highest growth rate of 55.7% CAGR, owing to the spike in investments in blockchain technology solutions.
Blockchain offers a world of new opportunities for financial institutions, with benefits such as data transparency, enhanced security, reduced costs, and increased efficiency and speed.
Cross border transactions
While in the past decade, there are still plausible gaps caused by multiple clearinghouses and lack of global standards. Blockchain is being used to overcome barriers of fragmented and fee-intensive infrastructures by building competitive marketplaces for liquidity providers offering the lowest exchange rates. By doing so, average remittance rates that are currently between 5-20% can be slashed down to 2-3%. Set up an international regulatory body to set laws.
Implementing this innovation, Barclays joined JP Morgan Chase, Bank of China, and Goldman Sachs to focus on blockchain technology applications in the foreign exchange and settlement. Also, the German Fidor Bank collaborated with Ripple Labs to provide customers with multiple transfer rates in multiple currencies.
Insurance
When it comes to claims management, fraud detection and risk prevention are the perennial apprehensions of any insurance firm. Reports show 5-10% of all claims in the US are fraudulent, amounting to more than 40 billion USD per year. Blockchain promises to reduce these numbers through timely and error-free evaluation of claims. Moreover, the technology is already equipping insurance companies to access up-to-the-minute geographical information through a distributed network.
Traditional insurance institutions like AXA and Generali have already started investing in blockchain technology to ensure safe processing.
Trade Finance
Being plagued by delayed payments, duplication of bills, and invoice factoring among other recurring problems, this financial realm can be a tangible transformation by embracing blockchain. The technology can be used to finance real-time review of documentation, decentralized contract execution using smart contracts, automated payments and regulatory transparency among a gamut of other benefits. The technological competencies of delivering trust, security, risk mitigation and seamless processing.
IBM has developed Digital Trade Chain, an open business blockchain based on distributed ledger technology (DLT) to enhance trade between the seven European banks including Deutsche Bank, HSBC and a few others. Also, Singapore's DBS Bank collaborated with Standard Chartered and Infocomm Development Authority of Singapore (IDA) to reduce and reduce financing.
In addition to these, the blockchain has also triggered a wave of digital transformation, especially in streamlining. KYC documentation and AML, tax payments, and other non-critical financial processes and impact both the private and public sectors, and the shareholding space. NASDAQ has an alliance with Linq to help companies display their share of ownership using blockchain technology digitally.
Market forecast
The implications of blockchain are resounding. The technology promises a slew of advantages like:
- Increased efficiency through data immutability and transparency
- Enhanced customer experience powered by competitive pricing and better TATs
- Higher availability of capital through quicker processing
These overarching benefits are complying with the key industry players to collaborate with the top fintech vendors to envision a new operating model for finance. It is no surprise why the six largest banks of the world – Barclays, Credit Suisse, the Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street are teamed up to create a new form of digital cash for financial transactions over blockchain.
Approximately 66% banks and 90% payment companies are expected to adopt the technology by 2020. For instance, R3 CEV is helping to create private systems and to support global financial stalwarts like UBS, Barclays, JP Morgan and the Royal Bank of Scotland. This is a great place to be in the realm of social issues.
Fintech blockchain applications are taking the industry by a disruptive storm. Even non-banking financial services like wealth and asset management will be soon reaping the benefits of this platform. Financial institutions of varying sizes must seek the necessary guidance to integrate their own benchmarks of cost reduction, increased productivity, and customer satisfaction across the value chain.
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