Invented back in 2008, Blockchain
technology is making waves not only in the tech world but financial sector as
well. 24% of the world’s population is already familiar with the concept of
blockchain technology. In 2015, 13 different blockchain companies
secured $365 million in funding. And by 2016, they had raised well over one
billion dollars to drive their operations. However that speed of development isn’t
always in the companies’ benefit, banking sector for example is particularly
susceptible to getting overwhelmed with all the potential that blockchain
technology offers for change, iteration, and development.
And that is why according to 70% of
financial service leaders the speed at which blockchain technology is
gaining traction concerns them. Blockchain developers Dubai say the technology
is here and is already affecting the banking industry. Some of us are ready to
adopt it, most are not. Think of blockchain as a mathematical model for
processing, securing, and finalizing transactions which is why it has the potential
to change banking industry forever.
There are two main reasons that blockchain technology is
going to revolutionize the banking industry in the next decade.
1.
It’s Far Less
Expensive
Banks have a cheaper option to
conduct their operations, will they take it? Of course they will. If they can
spend less money, they will. There are three major factors pushing banks to
raise their costs and lower the efficiency: 1) An uncertain regulatory
environment, 2) historically low interest rates, and 3) digital disruption. These
three factors can cost financial companies around the globe $300 billion by
2021. Businesses each year send about $150 to $300 trillion for
payment across national borders and for those transactions the fee averages
around 10% and 2-5 business days for the transactions to complete. That’s a lot
of fee and a lot of time. This, of course is one of the many reasons blockchain
technology appeals the banking sector so much, they can increase their efficiency
while reducing their costs and hence gain more customers.
2.
Transactions
Are Significantly Faster
The wait times on deposits in
personal banking are often wildly frustrating. It takes around 2-5 business
days for a usual bank transaction to complete. With blockchain on the other
hand? It’s way faster and easier to make a bank transfer which is not only definite
but secured as well. To test the proof of concept on how fast you can make a
cross-country payment using the technology, SAP, ATB Financial, and Ripple collaborated
to send the first ever international blockchain payment from Alberta, Canada to
ReiseBank in Germany and in a matter of seconds the transaction was complete.