It’s no secret that banks today are seeking out ways to implement blockchain technology. By combining technologies, such as cryptography, shared databases and blockchain, professionals can simultaneously access real-time digital ledgers.
However, there are key other areas of finance that will be affected the most. Let’s take a closer look.
Clearing and Settlement
This is the area of finance where loans and securities are recorded. It consists of a complex web that costs financial institutions billions of dollars to operate.
By simply switching over to blockchain technologies, banks can save a whopping $10 billion. Some even estimate that it can eliminate $20 billion of annual costs to the middleman.
All across the world, central banks are considering the potential paradigm shift blockchain technologies will have on payments systems. Some are even exploring the launch of cryptocurrencies.
Meanwhile, commercial banks are already jumping aboard the bandwagon of blockchain. It’s expected that within the next few years, we’ll see central banks in the position to push out digital currencies.
Today, you find much of the bills, letters of credit and other trade finance documents on paper. The issue here is lack of access and a higher potential of fraud and loss of important data.
Blockchain technologies combine databases and other digital formats to make information more accessible. By switching to paperless, it can reduce crimes and promote productivity in the financial workspace.
But these are just three sectors that can and will greatly benefit from blockchain. But we’ll keep a close watch to see what blockchain holds for the future of finance.