Use Cases for Blockchain In Finance

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One such technology that has allowed the world to continuously advance over time is blockchain technology.

The world might be completely transformed by this technology, not just in the crypto industry but also in the other industries with which we engage every day. We will now examine some more particular instances of how blockchain might transform the banking and financial sector. Suppose you are searching for a top-notch platform to trade your crypto assets, check this Bitcoin trading platform for more info.


Enhanced KYC

Enhanced KYC

Every time a bank receives a new customer, they must go through the KYC (Know Your Customer) identification verification process. Because assessments and clearances from other banking institutions and third-party organizations are required today, it might take more than a month. Up to 160 million dollars are spent by banks annually on KYC compliance.

By accelerating the verification process, removing errors and duplications, preventing repeated interactions with many institutions, and enabling the avoidance of fraud and forgeries, the fintech blockchain implementation is a practical solution. Once authenticated, the information will be securely kept in the system and easily accessible to other banks.


Lending And Direct Payments

Blockchain financial services can enable direct payments between individuals or businesses without the use of banks or processing hubs as middlemen. The world gets introduced to the idea of DeFi as transactions become quicker and more affordable, and blockchain also provides transparency and traceability.

DeFi aims to make it simple for anybody in the world to take part in a new financial ecosystem that supports peer-to-peer lending and payments, doing away with the need to utilize banks, lending firms, and other organizations. So, in addition to the benefits, blockchain poses certain risks to banks and may necessitate the need for additional security measures.


International Trade Finance

Blockchain may greatly enhance and optimize supply chain management and global trade procedures when it is integrated into the financial system. The businesses engaged in the global trade network may efficiently govern their financial obligations to one another, check the quality of their products, build greater mutual confidence, and complete all essential payments with the use of smart contracts and blockchain-based IoT solutions.

All of these tasks will also take less time, money, and effort.


Clearance And Settlement Systems

Bank transfers can be facilitated and accelerated using blockchain distributed ledger technology. A typical bank transfer might take up to three days to complete from one region of the world to another. This occurs because the transfer must go via a complex network of intermediaries, which includes correspondent banks and custodial services. The banks that carry out the sending and receiving transfer operations must, in turn, cooperate with the global financial system, which comprises numerous dealers, asset managers, funds, and other entities.

The need to reconcile every transaction across the ledgers of several financial organizations can be done away with by blockchain technology in banking. As an alternative, a distributed ledger with recorded transactions is available to any financial institution. In this approach, the whole ecosystem of custodial services as well as correspondent banks may view every transaction in a public, transparent, and consistent manner.


Fundraising

Fundraising

Companies must pursue two goals at once: finding outside investors and advancing their product development. Blockchain ICOs challenge traditional fundraising models, allowing businesses to raise funds in new ways.

Companies make their own initial coin offers (ICOs), which they sell to the general public using well-known cryptocurrency platforms such as Ethereum or BitCoin. This allows them to swiftly raise the required finances before releasing their goods to the market.


Conclusion

I have just briefly mentioned a few use cases of how blockchain is transforming the banking and financial industry in this article. Processes become simpler, quicker, as well as more reliable, exposing the sector to new situations with growth possibilities and challenges.

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