Application of blockchain in banking

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WATCH RELATED VIDEO: Blockchain for Banking

Bank of Baroda uses blockchain to gain market advantage: Akhil Handa


The Global FinTech Ecosystem. And the big question is decentralize what — and for who? Don't miss new reports! So will the banks embrace or be replaced by it? So far they have only dipped their toes in the water. But a number of banks are now experimenting with issuing bonds on blockchains. This makes financial sense. The beauty of blockchain is its automation and the redundancy of the middleman. Use of blockchain cuts down the number of intermediaries involved in the transactional process for issuing financial instruments.

The European Investment Bank is already showing its confidence in blockchain. But when it comes to day-to-day transactions, banks so far have moved little. But they have reason to be worried. If blockchain technology becomes mainstream, the impact will be on all of this:. The answer is to grab its advantages to introduce a new level of transparency and security, significantly reduce complexity and abandon redundant elements of current infrastructure. Thanks to their deep understanding of end users' needs, financial institutions are in the right place to embrace the opportunities of blockchain and to benefit from its new transactional paradigm and its cost saving potential.

But they need to act fast. Because the only way is forward, before the Fintechs step forward …. We respect your privacy, by clicking 'Submit' you will receive our e-newsletter, including information on Webinars, event discounts, online learning opportunities and agree to our User Agreement. You have the right to object. For further information on how we process and monitor your personal data, and information about your privacy and opt-out rights, click here. All rights reserved.

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Don't know what's Blockchain technology? Let us explain

Ever since Bitcoin was introduced in late , the blockchain code that underpins the cryptocurrency has been the source of hope and fear—and much hype. In theory, agile startups could create software built on blockchain protocols with the hope of providing a safer, faster, cheaper and more transparent alternative to traditional financial intermediaries, such as banks, brokers and complex clearance processes. The opportunities, much of which is currently focused on post-trade processing, could compete with, and potentially threaten, financial incumbents. In practice, incumbent financial institutions are investing in building permissioned blockchains—a digitally distributed ledger where authorized users can record, process and verify transactions—to streamline their own operations and costs, according to a recent Morgan Stanley Research report, "Global Insight: Blockchain in Banking: Disruptive Threat or Tool?

To see how a bank differs from blockchain, let's compare the banking system to Bitcoin's implementation of blockchain.

How Blockchain Could Disrupt Banking

Even years into the deployment of the internet, many believed that it was still a fad. Of course, the internet has since become a major influence on our lives, from how we buy goods and services, to the ways we socialize with friends, to the Arab Spring, to the U. Yet, in the s, the mainstream press scoffed when Nicholas Negroponte predicted that most of us would soon be reading our news online rather than from a newspaper. Fast forward two decades: Will we soon be seeing a similar impact from cryptocurrencies and blockchains? There are certainly many parallels. Like the internet, cryptocurrencies such as Bitcoin are driven by advances in core technologies along with a new, open architecture — the Bitcoin blockchain. The internet and its layers took decades to develop, with each technical layer unlocking an explosion of creative and entrepreneurial activity. Early on, Ethernet standardized the way in which computers transmitted bits over wires, and companies such as 3Com were able to build empires on their network switching products. Cisco built products like network routers, capitalizing on that protocol, and by March Cisco was the most valuable company in the world.


Blockchain Use Cases For Banks In 2020

application of blockchain in banking

Blockchain technology is an open, distributed ledger that records records transactions between two parties. A blockchain is made up of individual data blocks that include a sequence of connected transactions that are linked in a certain order. Without the need for a centralized authority or middlemen, all of the parties involved can share a digital ledger across a computer network. As a result, transactions on the blockchain are processed more quickly.

There are thousands of cryptocurrencies in existence today, like Ether built on Ethereum, the most actively used blockchain and Dogecoin which started as a joke.

Connecting cryptocurrency to everyday banking

With an initial purpose of a mechanism behind cryptocurrencies, today the blockchain technology has stepped far beyond just powering the bitcoin or ether transactions. Blockchain is a powerful and secure technology that is getting into almost every industry, from banking and medicine to the government sector. According to Forbes , blockchain brings the following benefits:. The most popular domain of blockchain use is the banking sector because security is of utmost importance for the financial domain. So in this article, we are going to talk about how blockchain can revolutionize banking.


Carlos von Prabucki, Head of Financial Services and Insurance, Southern Europe, Atos

Given that Blockchain technology poses a growing challenge to the banking industry, this paper aims to analyse the innovation of Blockchain banking with regard to its systemic dimension, as well as dynamics of competition. The empirical research demonstrates how the systemic characteristics of Blockchain banking relate to the pursuit of strategies and to what extent these strategies influence the directional path and level of technology diffusion. The research study uses a case study methodology to explore the strategic competition of Blockchain banking. The study proposes the systemic innovation model for analysing and tracking the path of innovations. The model can be applied to any industry to understand the process of innovation development and the strategies to win market share in the banking industry. This research makes a contribution towards the theory of technology diffusion to understand the directional path of innovations. The analyses of findings reveal the situation whereby most banks still compete to create their own Blockchain banking systems. The analyses, based on the systemic innovation model, also shows the low systemic feature of Blockchain banking at present.

Lenders can use blockchain to execute collateralized loans through smart contracts. Smart contracts built on the blockchain allow certain events.

Banking on the Blockchain

Joining a banking consortium R3 or cross-sector consortium Hyperledger project with the aim of defining a de facto, interoperable standard with members of the consortium. Launch of a partnership with companies in the blockchain field such as Ripple , to speed up knowledge acquisition and launch collaborative experiments. Using blockchain technology for enabling streamlined P2P payments circuits, transferring funds between different banks or defining new remittance services. Exploiting the features of the blockchain for streamlining Finance processes, with regards to both how funds are transferred as well as how securities, commodities, and derivatives are cleared and settled.


The surge in technological transformation affects all business model phases over many industries. Emerging technologies provide new avenues for industries to increase their competitive advantage and enhance economic progression. The adoption of blockchain in the banking and insurance industry is developing rapidly. Applications, Challenges, and Opportunities of Blockchain Technology in Banking and Insurance explores how blockchain technologies optimize and integrate the transactions and operations in association with access to information and reduction in communication costs and negligible data transfer errors. It includes studies on various banking and insurance industries intending to use blockchain technology to make transactions convenient, simple, and safe.

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Schmid , and Stefan Bochtler. Blockchain and other distributed ledgers go far beyond cryptocurrencies. They are becoming core banking activities and offerings. These top seven DLT trends make the leading-edge possibilities accessible. Cryptocurrencies such as Bitcoin and Ethereum, which emerged after the financial crisis, have grown increasingly popular as investment alternatives. Still, the impact of the underlying technology has not yet been fully realized.

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  1. Cadhla

    What a success!

  2. Aheawan

    You are not the expert, coincidentally?