In its short tenure, bitcoin and the technology underlying the popular crypto currency- aka blockchain has disrupted digital transaction sector in a big way. Compared to the early years, the mass perception regarding the technology is clearer and adoption rate is also growing with time. It is not only being embraced by several celebrities and public icons but bitcoin is impacting the way digital transactions are done –in the wider perspective. While Bitcoin continues to be unregulated and mass adoption is still slim, it has made significant impact on the banking sector.
Banks accepting or acknowledging the potential of Bitcoin for safe digital transactions
Initially, the majority of banks were hesitant to acknowledge the potential of using bitcoin and similar crypto currencies owing to the volatile nature and lack of regulation. In fact, the reasons behind a majority of banks and NBFCs still shying from adopting Bitcoin are these. However, in the last few years, the perception about blockchain technology has become clearer. A few big banks and financial entities are experimenting with the technology to enhance their operational efficacy. Some of them are also doing R&D to come up with their own crypto currencies.
Top banks that have started using bitcoin and block chain tech
Listed below are some of the top banks that have started using either bitcoin or blockchain technology in some form or other.
- BNP Paribas- Well known French origin bank BNP Paribas is analyzing the scope of using bitcoin. While the bank has not made any official move on this, publications in its magazine hint at crypto currencies involvement in the near future.
- SocGen- Another big bank in France, Société Générale is now searching for bitcoin developer. Possibly, the bank wants to explore possibilities of involving bitcoin and blockchain in its operations. It may eventually develop in house applications.
- Barclays- The famous British multinational bank is keen on implementing bitcoin technology. It has tied up with Safello- a bitcoin exchange based in Sweden. The bank wants to find out how blockchain tech deployment can boost the financial services segment.
- JPMorgan Chase- JPMorgan Chase, which is a major financial player, believes firmly in potential of blockchain. The company has assigned Quorum division- a distinct entity, to study and deploy this technology. The bank is now examining applications for major financial processes.
- Goldman Sachs- Goldman Sachs is a major supporter of the distributed registry technology and it has invested in the much touted Circle cryptocurrency project already. It may eventually unveil its own cryptocurrency to deal with entire digital currency trading activities.
- Banco Santander – Banco Santander, the Spanish banking behemoth is now experimenting actively with blockchain technology. It has come up with One Pay FX payment system-and that is now fully functional. The system’s main aim is optimizing payments between South America and Europe with deployment of distributed ledgers.
- Citi Bank-The bank, which is the 8th largest in the world, is now exploring distributed ledger technology. In fact, the bank is said to have developed its own crypto currency.
- UBS- UBS, a Swiss investment bank has unveiled a lab for carrying out blockchain technology research in London. It aims to reduce the gap between FinTech and banking. It also wants to explore how traditional banking can grow through innovations.
- Standard Chartered- Standard Chartered’s chief innovation officer Anju Patwardhan recently spoke at length on LinkedIn on how blockchain tech can be used to reduce operational costs. So, it is taking blockchain tech seriously.
- The Billon Group- The Billon Group -a British fintech company, has come up with a one of its kind blockchain-based solution for processing customer data. The bureau’s management thinks blockchain solution is compliant with data protection regulation and legal requirements. It also adheres to the industry regulations and enhances operational efficacy. The product offered by the Billon Group is now being tried by 8 Polish banks.
An Accenture consulting company study reveals blockchain tech is going to get involved in activities of financial companies in the near future. Accenture analysts are of the view, the global banking sector may save a whopping amount by the year 2022 through blockchain deployment.
Implementing Blockchain can be advantageous for FinTech Companies and banks
Blockchain, when deployed in proper ways, can be helpful in resolving numerous issues faced by both the NBFCs and banks- say the top financial analysts. Blockchain technology provides great safety in data transmission and storage. It also scores owing to lower operational cost and transparent network infrastructure. These may make blockchain a promising solution, even in restricted bank industry.
Besides, the majority of financial institutions cannot execute their work without involving plenty of mediators, and that leads to incurring significant cost. By deploying blockchain these entities can get rid of involving the mediators. Eventually, the service quality will get a boost.
The banks and NBFCs can deploy blockchain tech to reduce the costs and make intra bank transfers quicker. In fact, the independent financial analysts think Blockchain may eventually be used in lieu of the widespread SWIFT bank transfer system.
The blockchain applications in banking industry can be used to develop advanced client identification system, based on its distributed ledger technology. The credit organizations now need to execute KYC processes.
Another notable advantage of using blockchain in financial sector is time saving. By using blockchain tech, time required in loan processing can be greatly reduced, thereby making things easier for the end users/customers. It will also help in saving time required for confirming information and processing it. Cross-border crypto transactions tend to be way faster than prevalent methods of sending money abroad.
What the future of bitcoin in banking sector looks like
In the last decade, banking sector has been embracing web technologies and it continues to evolve fast. Technological evolution has changed how people live and do things in unprecedented ways. So, it is only natural they will do banking and financial transactions differently in future! Netbanking and debit/credit card based transactions are no longer deemed cutting edge methods- particularly by the millenials. App based payment systems have become very popular and mainstream banking users are deviating towards them-all over the world. Emergence of block chain and crypto currencies in the banking sector can mark a paradigm shift, say the industry experts.
Slowly but steadily the digital payment platforms, wallets and apps are making room for bitcoin and other crypto currencies- and this trend is here to stay. It will still take bitcoin a long time before it can be on par with accepted currency types like Euro or pound. The legacy of traditional banking is too deep rooted to be erased by a contender that is not even a decade old-for sure! Blockchain in banking is still a niche segment that is being explored by the proponents and users with specific financial and investment needs. However, in the near future the scenario will be different!