Blockchain in Retail Banking
Blockchain technology is a promising feature that can bring new norms to every use case. Blockchain is a digital, public ledger or database that records online transactions. Early enthusiasm for this technology among corporate banks, capital markets, and infrastructure firms is now coming to retail banks. Today retail banking has to adopt new technologies, including Blockchain, to improve their services.
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How is Blockchain Revolutionizing the Retail Banking sector?
With the emergence of this technology, the retail banking sector is looking more at the benefits that Blockchain brings to retail banking. The experts in retail banking are showing how interesting blockchain technology can be for consumers.
Blockchain technology can change retail banking operations fundamentally. It can provide them better services and improved security to consumers’ information and assets.
As per Chris Huls, Rabobank: “you can use blockchain technology as another effective way of paying each other, rather than depending on SWIFT or any other payment schemes.”
However, the hesitation of retail banks to adopt blockchain technology, contrasts with efforts that can be seen elsewhere. Investment banks, government organizations, and infrastructure providers are experimenting with blockchain technology in belief that the electronic ledger which is shared is going to help them increase transparency as well as reduce cost.
When it comes to blockchain technology in retail banking, this technology can offer three key strengths to this sector including:
– Disintermediation
– Trust
– Data Handling
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Applications of Blockchain in Retail Banking
Here are some of the most important applications of blockchain technology in retail banking that you must know. The use cases given below can help you understand how and where blockchain technology can be used in retail banking more effectively and efficiently.
Remittances
Cross-border payments are increasing day by day. what’s more is that the market is about to expand its growth 3% per year. However, traditional payment processing tends to be opaque, highly mediated, and clunky, which results in higher fees. However, blockchain technology can help to reduce this effect.
ID fraud Prevention
Blockchain technology has also been tested and rolled out for effective ID fraud prevention and detection. With private key management, blockchain technology can help the customers to share and control their data without any intermediary.
Risk Assessment with the use of customer data
Retail banking companies can use blockchain technology to gather a large volume of data that can be protected and anonymized by the encryption protocols of ledgers. Additionally, to make better risk-management decisions, banks can view data theoretically that any bank has uploaded on the network. The result would be in the form of more efficient processes, potential for more informed credit allocation process as well as faster decision.
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Companies using Blockchain in Retail Banking
One of the largest banks of Australia, i.e., Westpac, partnered with Ripple in 2016 for global payments to implement an effective yet low-cost cross-border payment service based on blockchain technology.
An Irish dairy products manufacturer, Ornua, partnered with Barclays in 2016 to complete the first Blockchain as well as a banking trade transaction of the world.
Final Words
Overall, blockchain technology can help the retail banking sector to thrive. It is because of various reasons, such as Blockchain is decentralized, it can validate and record each transaction, and doesn’t require any kind of third-party authorization.
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