Blockchain, the technology underpinning bitcoin, is one of the most important innovations since the development of the Internet. It has generated a lot of interest lately and it is likely to continue in view of the broadening adoption.
The globe’s leading banks are starting to realize they need to embrace innovative technologies in order to stay competitive in today’s digitized world. Financial services providers are actively investing in various blockchain projects aimed at exploring the potential use cases of the technology.
A major software solutions provider, Sopra Banking Software, has published blockchain infographics that highlight the main benefits of the technology and analyze its potential role in the future of the banking industry.
One of the most important benefits of the cryptocurrency technology, the company stated, is that it eliminates the need to deal with intermediaries. Unlike current centralized systems, which depend on a single entity, the blockchain has no central ledger. The distributed nature of approving transactions makes it hard to compromise the system.
Voting management is one of the other areas that can be improved with the cryptocurrency technology. The use of the blockchain can retain the simplicity of electronic voting while providing an increased security. In 2015, NASDAQ CEO, Bob Greifeld, announced that the Estonian NASDAQ market will apply the blockchain to streamline the process of proxy voting.
The technology can also be used to simplify the issuance of dividends and shares, say the blockchain infographics. This year, online retailer Overstock.com secured the U.S. Security and Exchange Commission (SEC) approval for the use of the blockchain to issue company shares.
Financial organizations expect they would significantly benefit from integrating the blockchain, which offers such advantages as higher transparency, faster transactions, and lower threat of hacking attacks. Moreover, companies using the technology would be able to reduce costs of transactions settlement. As Sopra Banking Software wrote in its blockchain infographics, banks would save up to $20 billion in fees if they integrate the blockchain system.
Meantime, researchers from Greenwich Associates discovered that the majority (94%) of the interviewed financial professionals believe that the distributed ledger technology would be beneficial to institutional markets. Besides, the study found that half of the surveyed were actively reviewing the blockchain within their companies.