Ever since the first cryptocurrency, Bitcoin, was introduced in 2009, the underlying blockchain technology has been gaining huge popularity and adoption. The reason behind the burgeoning popularity of blockchain is its way of verifying transactions. It counts on consensus among a peer-to-peer (P2P) network of computers based on complex algorithms rather than a central bank or a third-party. The elimination of intermediaries has accelerated financial processes like cross-border transactions, trading and settlement, and more, while making them more reliable and cost-efficient.
The synergy of blockchain and services of enterprise blockchain consultants has helped various start-ups and incumbents, especially in banking and finance, to navigate their blockchain development journey. According to an estimate, the number of blockchain start-ups sits at over 5,000. Start-ups can typically lack the in-house technical knowledge and expertise, blockchain consultants steer their blockchain implementation process – from identifying and piloting use-case to implementing and deploying the solution.
Ways Blockchain will transform Banking
Blockchain holds the disruptive power and huge potential to transform nearly every process – whether it is the basic documentation or settling time-consuming transactions. These inherent capabilities of blockchain are attracting finance and banking decision-makers who believe that blockchain can bring profound, positive changes to their industry.
- Blockchain for Trade Settlement
The current settlement process is based on the T+2 time-frame, which means that two to three days are required to settle transactions. Blockchain technology will bring everything on a distributed ledger, leading to the following benefits:
- Global Trade
Blockchain will enable seamless global trading due to the distributed ledger that is accessible to everyone on the network, regardless of their geographical location. Furthermore, it will bring complete transparency to the system.
- Lower Operational Cost
The elimination of intermediaries for trade settlement will result in reduced commissions and other costs. In addition, it will accelerate trade settlement (in the T+0 time-frame).
- Increased Trust
As blockchain records all of the transactions transparently on a distributed ledger, a higher level of trust between the capital market participants can be built.
- Blockchain for Trade Finance
The trade finance is one of the areas ripe for blockchain transformation. Global leaders such as Deutsche Banks, Bank of America Merrill Lynch, and JP Morgan are harnessing blockchain technology, and thus services of enterprise blockchain consultants, to enhance their workflows and cut-down their costs.
A blockchain-driven trade finance solution involving a letter of credit, bill of lading, and multi-signature solutions will comprise the following features:
- Carriers provide a bill of lading as a digital asset on the blockchain
- Banks issue letter of credit on the blockchain as a digital asset
- Contracts based on multi-signatures
- Smart-contract-driven transactions to ensure transparency and speed
Blockchain is poised to transform finance and banking, bringing greater speed, trust, transparency, and cost-efficiency to operations. Start-ups or banks planning to upgrade their current systems should have blockchain on their mind as its potential can bring significant value to the industry.
At Millennial Partners, we offer consultancy for enterprise blockchain, helping enterprises with complete blockchain implementation. We follow a coherent roadmap – from use-case development to solution implementation to deployment – to efficiently navigate the blockchain transformation journey for our clients.
Millennial Partners (millennial.ae) prides itself on serving clients’ most pressing organization transformational needs across people, processes, and technology through its own proprietary frameworks. Our digital transformation offering is most relevant to the increasingly digital enterprise and consumer environments. We follow a coherent roadmap that includes incorporating the most cutting-edge technologies and vendors focusing on technologies such as enterprise Blockchain, Artificial Intelligence, and IoT.
Should you have any questions and or would like some focused professional advice, please don’t hesitate to reach out via our e-mail at firstname.lastname@example.org.