Blockchain Revolution in Banking: Africa.
Blockchain technology’s impact on the banking world has been a topic of great interest.
It was created to offer numerous advances such as a public ledger with Bitcoin being its most successful real use case in terms of value creation.
Multiple users can actually have access to a common ledger which acts as a single source of truth.
Does that mean blockchain would disrupt the whole banking industry making the traditional banks obsolete, collapsing them and giving rise to a truly decentralized world where people handle their own money?
It may be a little too far fetched to mark the blockchain revolution as the end of traditional banks. The traditional banks do offer value in terms of a personal touch anyway.
A much more plausible reality exists in banks integrating the blockchain technology into its legacy systems to make its products and records ever-so-efficient and fast. Definitely,traditional roles in these legacy systems would be eroded and replaced by much more efficient technology which solves problems like time-intensive money transfer and multiple financial intermediaries acting as middleman, driving up costs.
But as a matter of facts, these problems are a problem for the banks too. Your bank makes no extra money by paying multiple intermediaries and enjoys no happiness in having a 3 day long money transfer.Anyway the blame goes to the way the banking infrastructure was built in the first place.
Presently the transaction has to go through a reconciliation process involving a global financial system, comprised of a wide network of traders, funds, asset managers, correspondent banks, custodians and more when you want to do a simple bank transfer.
Bitcoin and blockchain are often used interchangeably,but they are very different concepts anyway.
A technologist by name Igor Pejic explains this in BLOCKCHAIN BABEL: The Crypto Craze and the Challenges to Business. blockchain provides the foundation for bitcoin, but its applications is far beyond crypto currencies.
Blockchain technology was originally designed to transfer crypto currencies through a public decentralized ledger that eliminates the need for third parties to be involved by way of peer-to-peer transactions.Therefore, the root of the technology eliminates the need for intermediaries to verify transactions.Ideally, this allows more transparent payments with potentially lower third party transfer fees.
Furthermore,the decentralized nature of blockchain eliminates customer risk to identity theft by no longer storing all information in a centralized location.This new technology in which transactions are not updated by a central authority or privileged intermediaries such as credit-card companies or processors, but instead are distributed across different computer nodes over the globe is reshaping the financial institution.
Using blockchain, the banking industry can create smart contracts which can execute a variety of different types of transfers, transactions and settlements with immutability of title,value and identification of both tangible and intangible property.” It is a network based on peer-to-peer (P2P) technology.
<https://yosemitex.com/>, team to discuss blockchain and banking? The company recently launched Yosemite Card<https://urldefense.proofpoint.com/v2/url?u=https-3A__yosemitecardx.com_en_index.html&d=DwMFaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=EoA_C-GbbHwOxB0Z-S9m1Q&m=mrUw9hkgynKuD1f96XZ8zSLs2puQ0wwk-wi5K95uEFY&s=wPtDKGxoQR1J5eyyE458tA7V_5r3WOACiMuBhn09gy4&e=>, the blockchain credit card that allows businesses to rid themselves of burdensome transaction fees and step out from the shadow of credit card giants and Visa and Mastercard.
The foregoing lead to the many features that distinguish the blockchain system from current banking networks.
The technology of how blockchain and distributed ledger works,actually shows how financial institutions are being threatened and and what the are doing on the issue.
• Blockchain is the second generation of the Internet
• Open blockchains rather than closed ones will power tomorrow’s economy
• With the success of the blockchain comes the downfall of the banks
• Fintech are the banks’ main challengers
• In a digital world banks have no assets to compete with
• Blockchain will close the gap between the rich and average and poor.
The banking industry is tightly regulated in all jurisdictions,and its representatives are usually very conservative.
denies the promising technology.
Having said that, still the technology of Blockchain enables banks to process payments more quickly and more accurately while reducing transaction processing costs and the requirement for exceptions.Bank would be definitely interested in blockchain as it could potentially save banks billions in cash by ultimately reducing processing costs.Large banks are increasingly testing the technology of distributed registries and implement blockchain in business processes.They
regularly invest in various projects and start-ups that develop solutions based on the blockchain.
On a good note,according to a study by consulting company Accenture, which specializes in strategic planning, more and more of top managers already recognize that blockchain will play a key role in the success of financial companies in the coming years. Accenture analysts believe that the global banking sector will save up to $ 20 billion by 2022 through the
introduction of the blockchain technology.
Blockchain can solve a lot of problems that banks and financial institutions face today. The technology has many interesting features that make it as attractive as Linux was at the time of its appearance because of its openness and Skype due to the Voice over IP protocol.
Another usefulness of the blockchain in the banking sector is the creation of a customer identification system as earlier noted using distributed registry technology. This functionality is relevant because all credit organizations are required to follow the KYC( know your customer ) procedure when processing applications. therefore allows one-time identification of users and then securely store such information, giving access to it to other banks participating in the system.
Large consulting companies and independent financial analysts see blockchain technology in the first place as a possible alternative to the SWIFT bank transfer system in the very near future and means of reducing this transfer cost to the lowest minimum as well as speeding processes up.
THE FUTURE PROSPECTS
This technology is capable of drastically changing the procedures for concluding and confirming transactions, managing cash, optimizing assets and many business processes that today collectively cost banks billions of dollars in annual expenditures.
The adopted and established time frames can be seriously reduced,the time from the application to the issuance of a
loan,the time for interbank or international transfer, the time for processing and confirming personal information and so on.
Blockchain is not just a bright prospect for the banking sector, because it is already actively and quite successfully implemented, as we showed in the examples above. In the future, its penetration into the industry and the prevalence among financial organizations will only increase the more.
Blockchain can reduce the infrastructure cost of banks by 30%, it could
save EUR 9.7 Billion/year
Top banks using blockchain
Bank of china China
Yes Bank India
ALFA Bank Russia
United Overseas bank Singapore
Commonwealth bank Australia
Blockchain is a technology that provides a high degree of reliability in data storage and transmission, fast transaction processes, an open and transparent network infrastructure, decentralization and low cost of operations. The set of such impressive characteristics makes blockchain an extremely promising and sought-after solution, even in an extremely conservative and regulated banking sector.
Blockchain use – case: Energy.
Blockchain, how effective
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