Blockchain Adoption Progressing Into Retail Banking
Blockchain technology was originally invented to be a secure, immutable distributed ledger for Bitcoin transactions.
In many corners, the growth of Bitcoin is seen to be against the interest of central banks across the globe. Indeed, many governments are doing all they can to limit the growth of cryptocurrency use in their country.
Nevertheless, it’s going to be difficult for retail banks to ignore Blockchain technology going forward, as it’s so much more secure and reliable than traditional banking databases.
- The decentralized nature of the blockchain allows for faster payments than two centralized systems could ever manage.
- It is also less likely to be hacked or suffer from a system outage.
- The pseudonymous nature could potentially end identity fraud once and for all.
These are just three of the biggest advantages to switching to the blockchain.
Smart contracts and retail banking
The adoption of smart contracts could improve the efficiency of retail banking even further.
By using smart contract technology to detail all the processes within their products (insurance, packaged bank accounts, credit cards, etc.), it is believed that banks could significantly reduce processing costs.
It has been widely reported that many major banks are planning to use smart contract technology to replace the notoriously clunky Know Your Customers (KYC) identity management process in the short-term future. There are also many whisperings that banks will begin to hold Bitcoin and Ether in their reserves by the end of the year, as capital requirements.
How are banks already using the blockchain?
There are several major banks that have already moved to invest in blockchain technology.
A large group of retail banks, led by Switzerland-based UBS, has signed a deal to use the Ethereum blockchain to improve the reliability of their reference data.
Meanwhile, Spanish-based bank Santander has announced it will be using the Ripple blockchain to power its new mobile app.
Whether or not Bitcoin or other altcoins grow to become the truly global currency they are aiming to be, it appears that blockchain technology is here to stay and that retail banks will be making great use of it sooner rather than later.
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