The disruptive blockchain technology has the potential to drive a significant change across the finance industry. Combined research by Accenture and McLagan, a world-class capital markets benchmarking provider, shows that blockchain can lower the cost for central finance reporting by 70 percent.
Blockchain can eliminate the need for bank branches, or enhance competition by lowering market entry barriers.
Here are the five most common use-cases for blockchain in the finance industry that explain now is the time for digital transformation and enterprises can partner with the right digital transformation strategy consulting company to pilot these use-cases.
- Clearing and settlement
The centralized nature of clearing and settlement processes makes them ripe for blockchain adoption. Fortifying the clearing and settlement procedure with blockchain will forge the path for an expedited, transparent, and cost-efficient process.
It is even anticipated that blockchain will eliminate the need for clearing and settlement. Whether it happens or not, one thing is for sure that blockchain is poised to bring a revolutionary shift to the finance industry. Many financial services organizations are harnessing the potential of blockchain to enhance their clearing and settlement process. Some of these include Euroclear, SETL, and Citi and CME Clearing.
- Trade finance
The old practice of trade finance has witnessed a little transformation over its history. The integration of blockchain into trade finance will lead to a modern world, reinvigorated with greater transparency, more efficiency, amplified opportunities for new revenue, and lower cost.
- Cross-border payments
The international payments have to traverse through multiple banks to reach the final destination. This makes cross-border transactions slow, expensive, and uncertain as the amount of money that reaches the other end is not known until the payment reflects into the account.
Blockchain-driven cross-border payments can address these shortcomings, paving the way for transfers that are 388 times faster and 127 times cheaper than through conventional remittance channels.
- Know your customer (KYC) and Anti-money Laundering (AML)
The Immutable and secure nature of blockchain makes it a perfect option for complying with KYC and AML regulations, and serving as trusted repositories to identify information. Many banks in Singapore and India are seeking digital transformation strategy consulting services to identify opportunities for blockchain adoption to strengthen their KYC and AML verification paradigm.
- Insurance
Blockchain has various applications in the insurance industry. The transparency and efficiency offered by blockchain technology can help reduce fraud and automate compliance. It can be leveraged to create a secure ledger of information and ensure trusted and verifiable provenance information. A research by Accenture shows that 33 percent of insurers are planning for blockchain adoption in the next two years and 36 percent insurers have already integrated blockchain-based smart contracts into their systems.
Take away
Blockchain is transforming the future of the finance industry. The transactions held on Blockchain’s distributed ledger system enable the participants to see an identical version of records, thereby improving trust and transparency and eliminating the need to maintain intermediary ledgers.
Millennial Partners (millennial.ae) prides itself on serving clients’ most pressing organization transformational needs across people, processes and technology through own proprietary frameworks. Our digital transformation offering is most relevant to the increasingly digital enterprise and consumer environments. Our digital transformation roadmaps include 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 on our e-mail at info@millennial.ae