This is an essential topic that must be taken into account by all financial organizations, while bitcoin and cryptocurrency continuously increase the demand curve. With its distributed ledger technology (DLP), blockchain can offer major benefits to financial institutions such as cost reduction, increased transparency, faster transaction execution and efficient control of monetary transactions. Because customers prefer digital media for their daily activities, the transaction through digital platforms with greater security and ease such as blockchain technology will be a feasible option for them.
How do these technologies interrupt the financial sector?
The adoption of this technology itself will show impacts on almost the entire financial sector. The current banking transaction system is located under the central ledger for which the registration of the authority will be. But in the blockchain, the DLT allows organizations to keep their copy of the ledger. Here, everyone knows the rest and everyone sees what others see. With this, the greatest impact will be experienced by third parties. The need for third parties is due to the lack of trust between the banks. But in the blockchain, they are no longer needed due to similar, reliable and commonly accepted records.
In traditional banks, there is a significant challenge to overcome: the reduction of processes and procedures. With the blockchain, customers no longer need to reach banks and meet staff to approve and monitor monetary transactions. The possibilities for errors have been reduced in blockchain while the visibility of the transactions between the parties has increased. Reducing the workforce needs is the most important reason behind cost reduction with the help of the blockchain. This gave a broad consensus to those who have become part of it, since time and money are the most imperative aspects of human life.
In the insurance sector, some of the vulnerable factors are slow manual processes, fragmented data sources, fraudulent claims and legal underwriting. Here, blockchain technology eliminates all and creates policies like smart contracts that guarantee transparency, traceability and complete control of each accident and facilitate automatic payments. These impacts of the blockchain in the financial sector have created an extremely difficult environment for normal financial organizations or banks that can not easily be dealt with by them. The blockchain wins here.