This is an essential topic to be taken into account by all the financial organizations, while bitcoin and cryptocurrency are continuously gaining an increase in their demand curve. With its distributed ledger technology (DLT), blockchain can provide some great advantages to financial institutions like cost reduction, improved transparency, faster execution of transactions, and efficient control of money transactions. As customers prefer digital media for activities they do on an everyday basis, transacting through digital platforms with higher security and easiness such as blockchain technology will be a feasible option for them.
So how are such technologies disrupting the financial sector?
The adoption of this technology itself will show impacts on almost the entire financial industry. The current banking transaction system lies under the central ledger for which it will be the record of authority. But in the blockchain, the DLT enables organizations to maintain their own copy of ledger. Here, everyone knows the rest and everybody sees what others see. With this, the biggest impact will be experienced by the third parties. The need for the third party is because of the lack of trust between banks. But in the blockchain, they are no longer needed because of similar, trusted, and commonly accepted records.
In the traditional banks, there is a significant challenge to be overcome—the reduction of processes and procedures. With blockchain, customers are no longer need to reach the banks and meet the staff to approve and monitor money transactions. The chances for errors have been reduced in blockchain while the visibility into the transactions between the parties has increased. Reduction in the need for the workforce is the most relevant reason behind the cost reduction with the help of blockchain. This has given a wide acceptance for those who have become a part of it, due to the fact that time and money is the most imperative aspects of human life.
In the insurance field, some of the vulnerable factors are the slow manual processes, fragmented data sources, fraudulent claims, and legacy underwriting. Here, the blockchain technology eliminates all of them and creates policies such as smart contracts which ensure transparency, traceability, and complete control of every claim and facilitate automatic pay-outs. These impacts of blockchain in the financial industry have created a highly challenging environment to the normal financial organizations or banks that cannot be easily tackled by them. The blockchain wins here.