The internet is a powerful tool that has evolved our human race. But does it protect your personal information well enough? Offering a solution, Blockchain has emerged as the answer and plans to stay, making waves as a new technology which can provide a digital ledger to make transactions and do so much more. Now thousands of companies around the world are considering its value and how it can provide a platform to change the way we do business. A number of sectors are looking at the technology to galvanise their industry.
Blockchain can essentially store masses of data on a decentralised network, meaning you do not need to rely on a third party to store it, which is the traditional way. Additionally, since it is digitally stored across multiple computers on publicly viewed blocks, it can be shared worldwide but not accessed, altered or hacked from an outside source which does not have an encryption key or password. So many sectors could utilise its potential. For example, the NHS could benefit from this system to provide a secure and efficient means to share important confidential files between doctors and nurses, with a greater access across each hospital to save time and not require paperwork.
And it’s not just the healthcare sector that is looking at Blockchain. So many businesses could revolutionise their model based on this new technology. Think about it, what do so many businesses need and struggle with? Time, running costs, resources and reliability. One sector that has cottoned on to the use of Blockchain and is already being considered a necessity is in the financial sector. Banks are lining up to implement Blockchain. In a report created by Santander in 2015, they claimed by 2022 that Blockchain could be used for cross-border payments, to reduce banks’ infrastructure costs that are attributable to securities trading and save around US$20 billion per annum on regulatory compliance. A welcome addition to any bank.
In the UK, the likes of Barclays and RBS are just a few that are discussing how they can implement this technology to improve their service to customers and internally. It can help to authenticate payments and transfers with its time stamped transaction ledger. It uses cryptography to store data and ensure it is not deleted and importantly Blockchain records transaction details without leaking key information of the subjects or parties involved in the transaction, increasing the security of all involved. There’s also not just one area of banking that it can improve – it has the power to improve the commercial side with real time loan-funding using smart contracts, exchange offerings can be made using a virtual wallet, it can boost the speed of trade executions in capital markets and it can provide a platform for a greater execution and delivery of documents digitally in supply-chain finance.
At its core, Blockchain will involve more people in a larger network at a faster speed while providing more security and authenticity, so it has multiple areas where it can change the way we trade. This technology has been needed for years because so many aspects of banking are outdated and urgently needing a refresh. With the right regulations and a correct practice in place globally, it can revolutionise the industry. In trade finance for example, paper and faxing is still the main method for providing letters of credit or bills of lading. Due to worldwide demand for access to the same information, it can be a slow process which prevents a speedy resolution.
Banks are crying out for a business model that boosts efficiency to match the requirements of its customers. Another key area that needs improvement is identity. When you go into your local bank, they need proof of who you are to verify a payment or provide you with a statement (annoying, I know). Banks are fined if they get this wrong, and are seen as a trusted third party between the customer and the vendor. If there is a digital system in place that stores each customers details on a Blockchain file, it can be easily accessed by multiple users quickly, saving time and leaving the customer feeling happy and known personally by the bank.
Now the world needs rules in place that benefit the financial sector worldwide. Blockchain can only develop and provide improvements to banks, stock exchanges and financial services if protocol is followed and data is clearly stored, accessed and managed to reduce risk and increase efficiency. To do this, there needs to be a reasonable level of cooperation between a number of banks to make this a reality, and bring Blockchain forward as a necessity to all institutions. Over 90 central banks are in discussions already to work together. The World Economic Forum report, published in August 2016, stated over 24 countries are currently investing in Blockchain. It’s a global phenomenon that is gathering pace across multiple industries. Over 90 corporations are part of Blockchain consortia and more than 2,500 Blockchain patents have been filed over the past three years.
So who is already involved and which banks are still pondering its inclusion? In the UK, Lloyds bank have recently announced a partnership to introduce Blockchain to improve trade finance. RBS and Barclays have also completed a trial to improve transaction times using a Blockchain. Santander was the official first big bank to use it in the UK and many have followed suit, with the majority jumping at the chance to try this new trend. If you think of a popular bank in the UK, they have used it or in discussions to introduce a developed Blockchain to take them to the next level. Overall, it will take a great deal of time and planning to make this a reality in the financial sector.
Though Blockchain has its uses, protocol needs to put in place universally to ensure it achieves maximum potential. Just like the internet, it can be a game changer that pushes businesses on a couple more decades. Digital is the way forward and banks like Monzo and Revolut are already realising this, with many more following suit by going completely online. Branches are closing left, right and centre, but the introduction of Blockchain to store data, share information in a fast way and create an easier process to make transactions could have a huge impact on multiple financial services.-->