The characteristic features of blockchain technology -transparency, immutability, tamper-proof, and security at reduced costs and time have attracted various industries. Many industries are exploring the benefits of blockchain in their operational systems.

Know how blockchain is helping the major finance sector’s wings here.

Identity verification: 

The implementation of blockchain technology will remove the present system of identity verification which is conducted by incumbents and intermediaries. A single digital entry that is cryptographically secured and distributed across the network for Know Your Customer (KYC) details is more than sufficient. It eliminates the duplication of entries and verification.

A few of the use cases include: 

• Smart contracts are used for the distribution of values like assets, currency, gold, diamond or silver, stocks, and bonds. Blockchain reduces counterparty risks while verifying transactions.
• Blockchain and payment mechanism through permission blockchain decentralized cloud storage systems enables efficient storage of financial assets (commodities, financial assets, or currencies) while minimizing cybersecurity risks.
• Blockchain increases efficiency and improves systemic risk while reducing frictions in the lending business.
• Also, blockchain reduces the transaction settlement times in exchange values from days/weeks to minutes or seconds.

Capital market:

Blockchain automates the functions of investing model and thus makes the recording more efficient, secure, and transparent. Cryptocurrencies, smart contracts, and Initial Public Offerings (IPOs) help to raise funds or invest at the global level with ease.

A few of the benefits include:

• Blockchain manages risks in investment by protecting assets, and increasing transparency and efficiency at the same time.
• Manual and heavy lifting transactional activities can be made more efficient through the advisory roles and senior management.
• Blockchain can be used to eliminate a single point of failure through decentralization. Tokenization of assets leads to fractionalized ownership, wider market access, reduced operational risks, decrease settlement times, and increase liquidity.

Reporting and regulatory requirements:

Blockchain brings improved and simplified regulatory reporting through smart contracts. The data collection, consolidation, and sharing can be done automatically from a single source in real-time.

A few of the benefits include:

• The distributed ledger system helps to monitor information for security and reporting. Any suspicious activities will get directly reported to AML and national security forces.
• Blockchain blocks identity theft prevents data tampering and stops DDoS (Denial of Service Attacks) across the network making the financial system more robust.
• Blockchain improves governance and thus increases confidentiality for investors and stakeholders

Trade finance: 

Blockchain helps organizations to improve trade accuracy and this speed up the settlement process. It optimizes the whole lifecycle, exempts traders from wearisome paperwork and associated bureaucracy.

Some of the roles played by blockchain include:

• Verification of financial documents in real-time
• Use of digitalized documents and KYC/AML data to enable faster settlement
• Creation of financing structures using shared networks that are secure.
• Elimination of legacy practices for trade finance life cycle.

Banking and lending:

The use of blockchain in banking and lending processes helps to eliminate legacy processes of execution involved in the loan, mortgage, and payment services. All the way through, it reduces the time to secure a loan, counterparty risk, and decreases issuances and settlement times.

Blockchain helps in the process by:

• Authenticating KYC or AML data.
• Enabling real-time document verification.
• Streamlining credit scoring and prediction process.
• Automating underwriting and payouts.
• Facilitating asset collateralization.

Payment and remittance:

Blockchain eliminates the intermediaries at multiple levels involved in traditional cross-border money transfers. The money can get directly transferred from one bank to another at reduced costs while reducing the transaction time.

Blockchain helps in remittance through:

• Real-time verification of documents.
• Authentication of KYC and AML data.
• Enabling payments through the stable coin, cryptocurrency, and tokenized fiat.
• Securing cross-border payments and their settlement in real-time.
• Secures domestic retail payments, wholesale and securities settlements

Blockchain has enormous benefits across all the financial services involved. If the finance sector interests you or you are working in a finance sector, it is the best time to upgrade your skills in the blockchain. Blockchain will be soon implemented in all financial sectors irrespective of the size of the industry. To upgrade your career in finance, it is recommended to earn industry-related blockchain certification and stay in the race.