How Blockchain Is Revolutionising the Banking Sector
Blockchain technology has grown its influence and applicability over the years, most prominently in the financial and banking industry. From streamlining banking processes to expanding the reach of banking services to unbanked individuals all over the world, blockchain developers and businesses have realised the potential for blockchain technology.
Node.JS developers have become the forerunners in blockchain development, which has then led to the increased competitiveness in JS developer salary and blockchain development market. But, before diving into the development and market aspects of blockchain technology, let us first learn what blockchain technology is and its impact on industries like the Finance and Banking industry.
What is Blockchain?
The most popular technology associated with blockchain is Bitcoin's network of digital currency. Blockchain is a "record-keeping" technology that employs a decentralised and distributed system of ledgers to store digital information. As the name itself implies, blockchain technology utilises blocks – which represent information stores – connected by chains, which serve as public databases.
Blockchain works by utilising transactions and related transactional information. Each block contains transaction information - such as date, time, and amount -, related user information, and a unique identifier. With this, each block represents a unique set of digital transaction information. A transaction needs to be created and verified before it is added to a block and uniquely identified by a hash. The hash is used to locate and identify the specific block in a long chain of blocks.
A blockchain ensures that information is stored and can be distributed. However, the information cannot be revised or edited. This approach allows for transparency in the transactional records stored and auditability of information. Blockchain concepts are simple, which lends itself to a clear and stable foundation to build tools on. Tools that have proven over the years to be highly-effective, far-reaching, and have a tangible social impact.
Because of its popularity, there are now numerous blockchain platforms that businesses can utilise or incorporate to employ its capabilities. Ethereum, Hyperledger Fabric, IBM Blockchain, Multichain, and R3 Corda are only a few of the most popular blockchain platforms available. Organisations have the option to either leverage the tools made available by these platforms, or hire a blockchain developer of their own.
Impact of Blockchain Technology
Although it is most popularly associated with Bitcoin technology, blockchains have been used in numerous industries. Many organisations found blockchain technology to be among the top 10 game-changing technology.
In 2019, the financial sector, specifically banking and investment services, continued to grow and greatly benefit from implementing blockchain technology in their business processes, such as permission ledger and use of digital tokens. The E-sport gaming industry also found applications for blockchain through the creation of tokens and trading of virtual goods. While retail has considered it for inventory management, counterfeiting prevention, and tracking services, blockchain is expected to have more even more of an impact in the retail industry if combined with other modern technology and methodologies such as the Internet of Things (IoT) and Artificial Intelligence (AI).
The 2019 Deloitte Survey shows that 53% of various industries view blockchain among their top critical and strategic priorities. Over 80% view blockchain as a scalable technology for mainstream adoption and are planning to use it to replace their current record systems. Beyond the potential for process innovation, blockchain has now been used to further organisational social impact in industries such as Agriculture, Financial Inclusion, Governance, Health, Climate and Environment, and Digital Identity.
Blockchain Innovation in the Finance Industry
On top of its capability to innovate and streamline banking and financial processes, blockchain has also enhanced the financial industry's impact on the global population that remains "unbanked". Organisations have employed blockchain technology to expand payment and money transfer methods, and at times have provided a low-cost alternative for cross-border transactions. Wala, a fintech company out of Zimbabwe, Uganda, and South Africa, has developed a mobile banking platform that utilises blockchain technology to store transaction information and rapidly transfer funds for individuals without a bank account.
Fintech businesses have also employed the use of blockchain technology and cryptocurrency to bypass the need for intermediaries and numerous transfer and conversion fees. This tech enables businesses to transact and transfer money across different countries all over the world more efficiently. Such an organisation is BitPesa, a Kenya-based company that works towards empowering underserved markets through TransferZero, a blockchain-powered mobile, and an online financial transaction management platform.
Blockchain has led to significant gains for financial institutions, such as the reduction in infrastructure costs, improved efficiency and timeliness of transactions, enhanced security and data quality.
Blockchain is the Future!
Blockchain has brought about massive changes and innovation to various industries, especially for the banking and finance sector. This innovation would not be possible at all without the help of blockchain developers, who realise the potential for blockchain technology in numerous tools and platforms. Considerations like JS developer salary, blockchain developer skills, or blockchain tool development experience are only a small part of the larger movement towards innovating with blockchain.
Blockchain has revolutionised the financial and banking industry with its sheer applicability and potential. It has now expanded its applicability to other sectors. Soon blockchain will be fueling our day-to-day technology alongside AI, Machine Learning, Extended Reality, and others. At this point, it is merely a question of when, not if, organisations from across industries and practices will be incorporating blockchain technology and processes. This is by no means a bad thing. Any technology that has the potential and has shown its capability to elicit a positive change in the world and how it functions is always welcome.
About the author:
Anastasia Stefanuk is a passionate writer and Information Technology enthusiast. She works as a Content Manager at Mobilunity, a provider of dedicated development teams around the globe. Anastasia keeps abreast of the latest news in all areas of technology, Agile project management, and software product growth hacking, at the same time sharing her experience online to help tech startups and companies to be up-to-date.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 27/02/2020