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    December

    14 2017

    How Does Blockchain Technology Change The Security Landscape In The Finance Sector?

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    How Does Blockchain Technology Change The Security Landscape In The Finance Sector - Cygnet Infotech

    With the rise of blockchain technology, the finance sector is ready for massive transformation. This has made for a rather shaky relationship between blockchain supporters and the banking industry.

    Blockchain in an evolution in how people exchange currency. As with any disruptive technology, for the current established models of banking, it is seen as a threat to business.

    What Is Blockchain?

    Blockchain is a distributed, tamper-proof digital ledger for recording transactions. While originally developed for digital currency, the blockchain ledger can be programmed to record any transaction of value.

    Bob Greifeld, the Chief of NASDAQ, has stated that “blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole.”

    How Blockchain Works

    Blockchain - How it works - Cygnet Infotech

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    By using blockchain technology, several conventional banking processes can be modernized, from settlements and payments to security and decentralization.

    Financial giants like MasterCard, Standard Chartered and Visa are all big on blockchain and how it can help them grow.

    FinTech in general is gung-ho about blockchain. Many companies have already marked their presence by contributing to crucial blockchain areas like payment gateways, online forex trading and bitcoin transactions.

    The benefits of blockchain technology are many, as they address current problems in the finance sector, such as:

    • The old and odd pairing of paper-based transactions with industrial and digital technologies
    • The vulnerability of centralized systems to failure, cyber threats and updates
    • Restrictions to basic financial tools to meet new market demands
    • High transaction fees
    • Loss of public trust

    So, How Does Blockchain Solve These Problems?

    Fraud Reduction

    Nearly 40% of financial third parties, like stock exchanges, money transfer services and other payment networks, experience economic crime.

    Blockchain is decentralized, while most organizations remain tied to a centralized database. By decentralizing data with blockchain technology, fraud is reduced.

    Knowing Your Customer

    Financial companies spend anywhere between $65-$400 million per year to identify and verify their customers. Blockchain allows independent verification of a person to be shared among businesses.

    Payments

    Blockchain technology opens the gates for secured and low-cost payment processes between both businesses and people. Currently, there are several intermediaries that increase transaction costs. Blockchain eliminates these middlemen.

    Also, blockchain improves and streamlines the IT infrastructure involved in digital payments.

    Trading Platforms

    NASDAQ is already exploring blockchain to further boost efficiency, as it holds tremendous potential for any type of trading platform.

    Smart Contracts

    By being able to store any kind of digital data, including computer codes, on a blockchain, it helps digitally facilitate, verify and enhance the performance of smart contracts.

    Let’s Not Forget Trust

    In our digital economy, the all-too-common news of large data breaches and cyberattacks greatly impacts public trust. The longer businesses remain dependent on centralized data pools, the number of hacks and attacks will only continue to grow.

    Is Blockchain the End of Conventional Banking as We Know It?

    The seemingly invincible force of blockchain is ready to change the industry. But will conventional banking institutions allow it?

    Blockchain technology is not an existential threat. However, there’s always resistance to change. Established industries have a particularly difficult time getting rid of the old to bring in the new.

    The finance sector will emerge as a winner only if it can transform. Finance needs to build a new vision that aligns with technological progress. If it does, banking can be prosperous for businesses and customers alike.

    Ready to accelerate innovation and transform your business with blockchain?

    Request a free consultation and we’ll show you how. Talk to Cygnet at inquiry@cygnetinfotech.com

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