• bsi-innovation
  • bsi-learning
  • bsi-people
  • bsi-wealth
  • bsi-capital

Blockchain is revolutionising Finance and Banking

The shift from a centralized digital infrastructure to a decentralized digital infrastructure enabling an ecosystem of an immutable, secure, real time, distributed network has witnessed a rapid uptake from leading banks across the globe. Financial players are among the first movers to capitalize on this technology even though it is still at a relatively early stage. 

A lot of players are implementing Blockchain in the areas of Trade Finance, Cross-border Payments, Bill Discounting, Supply chain financing, Loyalty and Digital Identity areas according to Prateek Kumar, CEO at Kumar Capital Partners.
 
BCT applicability has a significant impact as the data shared among the banks/financial institutions in the blockchain network related to transactions, transfer of ownership, settlements, values/asset transfer etc, removes the dependency on the intermediaries who are mainly required in the traditional infrastructure. It improves interoperability, efficiencies, vulnerability.
 
 
The banks are concerned for an effective applicability of BCT as they are constantly in strive to develop and establish ubiquitous payment network with an appropriate regulatory framework to identify parties (Legal and Regulators) and validate electronic signatures. A smart contract is required significantly here from the legal perspective with standardized contractual clauses to authenticate the transactions.
 
BCT streamlines and simplifies the current procedures with the application broadly categorized into the following use cases:
 
1. Reduction in Frauds:
 Minimizing growth in fraud, Cyber attacks, points of failure, replaces obsolete IT infrastructure.  The multiple manual procedures used in banks and financial institutions create plenty of errors, manipulations, delays and frauds.
 
2. Trade Finance:
A blockchain solution can capture the details contained in a purchase order, bill of lading, invoices, tracking of shipment.  A trade finance solution with multi-signature solutions based on BCT can include all this information as secure BCT digital assets.  It reduces turnaround time, time and costs.
 
3. KYC:
 The current challenges are transaction delays, high compliance costs, large penalties for failing to follow KYC guidelines, negative customer experience, no international agreed standard.  An average annual spending on KYC compliance by banks is $50 million.  Some banks incur an annual cost of $400 million combining KYC compliance cost, Anti-Money Laundering checks and Customer Due Diligence.
 
Goldman Sachs Report a 10% headcount reduction with the introduction of BCT in KYC procedure (amount- $420 million), annual cost saving of $160 million,  reduction in employee training of 30%.  The overall operational cost savings estimated- $2.5 billion.   AML penalties reduction between $0.5 B to $ 2 B.
 
4. Trading Platforms:
BCT mitigates the risk of double spending and means to exchange assets without intermediaries, operational risks and admin costs made transparent and immutable, traceability and permanent historic record on blockchain of every item of value traded provides assurance and authenticity all the way through the supply chain back to the point of creation.
 
BCT provides a distributed and verifiable trust that was not present before. Moving clearing & settlement costs into a digital record on a blockchain in real time will save $20 Billion a year or more.
 
Payments related use cases are  ICICI, India’s largest private sector bank, Emirates NBD, a leading banking group in the middle East,  Yes bank, India’s 5th largest private sector bank with IBM Hybrid Cloud technology, Axis bank, India’s third largest private sector bank, working in association with the fintech firm Ripple for cross-border intra bank transactions.
 
Bank of America, Merrill Lynch, HSBC and the Infocomm Development Authority of Singapore have  success with distributed ledgers to replace paper-based Letters of Credit in trade finance transactions. The application enables exporters, importers and their respective banks to share information on a private distributed ledger. The application uses the open source Hyperledger as blockchain fabric, supported by IBM Research and IBM Global Business Services.
 
Barclays have carried out the world’s first trade transaction using BCT, cutting a process that normally takes between seven and 10 days to less than four hours.
 
If you sell your crypto currency it will go to a million dollars.  If you hold on, it will go to zero
Posted on August 28, 2017

Leave a Reply

Your email address will not be published. Required fields are marked *

referron-logo
BBG-logo
spark-logo
© Copyright 2017 BSI