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There has been a radical change in the way the financial industry leverages technology. Global institutions have the ability to respond and adapt to the growth and development of financial systems. In the future, the world expects prominent changes in financial transactions and management. There are innumerable applications for blockchain and cryptocurrencies that can shake today'’ financial systems completely.
Blockchain is used to overcome barriers to fragmented and charged infrastructure by developing competitive markets for liquidity providers with the lowest exchange rates. By doing so, the average remittance rates between five to twenty percent can be reduced to two to three percent. It is also essential to establish an international regulatory body to establish laws for the fair use of technology. Barclays joined JP Morgan Chase, Bank of China, and Goldman Sachs in implementing technology to focus on the application of blockchain technology in foreign exchange. Traditional insurance companies such as AXA and Generali have already begun to invest in blockchain technology to ensure the processing of claims.
There is always a third party, a bank or a credit card company, involved today in any financial transaction by using a national currency. This involves both the payer and the beneficiary costs of administration and transaction. Money transfers made by blockchain remove third-party involvement. It is a peer transaction that occurs almost instantly, without institutional administration and transaction charges. Removal of the intermediary in the money transfer process means that its control mechanisms have been democratized.
If any part of the financial transactions goes wrong, the current financial system is blamed where a person, a company, or a bank may be responsible. Often an investigation is needed to determine who holds the responsibility for what has gone wrong. Very often, research is long and not objective and may involve other parties, such as lawyers, regulators, and the judiciary to reach an agreement. No investigation would be required if the same transaction was conducted through blockchain. All it takes is to regularly check the transaction log to address those issues immediately and who is responsible for it. It also reduces the time and cost of resolutions significantly.
Blockchain has the potential to radically transform industries, including financial services, healthcare, transport or even the diamond sector. Financial services institutions should be keen to experiment in order to obtain the knowledge and expertise required. This will give them an opportunity to gain the experience they need to deploy innovative products that meet the digital customers’ requirements.