7 Best Practices to Get the Most out of Blockchain in Banking

It is believed that the banking sector shared a complex equation with blockchain these days. The technology provides a safe and convenient way for its customers to make their transaction through the internet without worrying about frauds and manipulations.

On the other hand, blockchain technology is also viewed as a threat to the traditional banking system.  Changes are always considered severe, and when you have to change the whole system, then adjustments are not even readily accepted by the organization.

But a financial institution has to understand that blockchain is very much beneficial for their growth. As the world is moving in the direction of digitalization, and the banking systems should join the trend and the blockchain is the method by which banks can do that.

That blockchain can make things easy for banks cannot be overemphasized given that prominent U.S banking mogul, JP Morgan Chase has evaded the industry. However, due to lack of information, some banks and other financial institutions are just confused about how to embrace blockchain technology for their operations.

Today, I have come up with the best practices which can help banks to get most out of the blockchain. Without wasting time, let’s jump into the details.

To understand better, first read Blockchain and Storage Bridging the Gap & how it could help in financial transactions.

1. Everyone can know their customer

With the help of KYC (Know your customer) not only banks but other people can also identify with whom they are dealing. Such provision is vital because, in this world full of criminals, you must save your money from going to the wrong hands. Also, before dealing with any customer, you must know the nature of the customer and his activities like what kind of services he wants from the institution. After knowing this, digital KYC is helpful to prevent you from dealing with the wrong people.

If we look at the methods of traditional banking to keep personal information of the person, then they rely on the Country Identity cards, and we also know that to make a fake card is not a big deal for criminals. But if we look at the blockchain, the digital system will collect all the information from digital media and authorized sources. And I am sure we can rely on the digital network more than physical.

2. Make the services faster

With the help of digital payments, banks can provide faster services because blockchain applications make it easy to send and receive money from any individual without any hustle in a fraction of seconds. In traditional banking system if we check the money transfer systems, then they were full of confusions, and the transfer took place so long. In the case of emergencies, the person could not transfer money instantly.

Also, the super fast money transfer system of blockchain can also be used in so many ways as people can also pay their bills, book a bus ticket, book a movie ticket, etc. in the fractions of seconds, And some applications which are already in use provides cash backs to the customers. These kinds of strategies also attract people to use particular banking services.

With the help of digital payments, you can make your services faster. Because blockchain development solutions make it easy to send and receive money from any individual without any hustle in a fraction of seconds. In traditional banking system if we check the money transfer systems, then they were full of confusions, and the transfer took place so long. In the case of emergencies, the person could not transfer money instantly.

Also, the super fast money transfer system of blockchain can also be used in so many ways as people can also pay their bills, book a bus ticket, book a movie ticket, etc. in the fractions of seconds, And some applications which are already in use provide cash back to the customers if need be. These kinds of strategies are very likely to attract people to use a particular bank.

3. Reduction of friction in global markets

With the help of security, the payment across the borders also became very safe. People can send money instantly, invest money in the financial institutions of other countries as well.  Along with that, they can also take advantage of so many international services. But it’s all dependent upon the financial institutes, they accept blockchain or not. Because it is believed by the experts that any bank which will not allow block chain may be at the stage of destruction.

4. Banks can make their transactions system Immutable

Immutability is perhaps the essential concept of blockchain in the banking sector. As we know that in blockchain the identity of the person remains hidden because the records are stored in the form of scripting language, nobody can change the personal details of the persons. Also, they cannot improve the flow of transactions. To see the actual flow, the authority is given to some high-end people only. This technology can make the banking system rigid.

5. Banks can make more links

Through blockchain, it will be easy for banks to attract customers towards them. Banks can make a marketing move with blockchain. The concept of blockchain is vast, and initially, a few of the features of blockchain are implemented by a few banks. But if your bank explores more of its features and implements in their system, they, the bank will grow within a few days.

People love to explore the technology, and if the technology is making their work much easy, they fall on it. So, my advice to the banks is that they should explore blockchain as much as they can.

6. People can store their money in a much secure way

Blockchain is believed to be a sward for banks with double-edges. On the one hand, we said that the money could be transferred more securely with the help of digital methods and on the second hand the storage of money will also be done with secure methods with the blockchain.

The banks have to store information about the transfer and keep updating the figures. As the money is flowing digitally, there is no need to keep much cash in the physical form by the banks in their big cash rooms. This will also reduce the chances of bank thefts.

7. It will become easy for banks to keep the financial books straight

Blockchain stores the transaction digitally, so there is no chance of errors in the figures of the transactions. So, this will help banks to make their financial book in the straightway. They have to take the printouts of the transactions and attach them with the financial books to make the balance sheets. So we can say that blockchain makes the record keeping process very streamlined and stable for the banks.

Conclusion

There are so many benefits of the blockchain applications available for the banks, to use these features creatively is dependent upon banks. If you are working with blockchain but you are not thinking out of the box to take maximum advantage then you are lacking. Start thinking today and for more about blockchain stay connected.

Author Bio: Muthamilselvan is a passionate Content Marketer and SEO Analyst. He has four years of hands-on experience in Digital Marketing with IT and Service sectors.