How Blockchain Is Revolutionizing The Banking Industry

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.