Deltec Bank – How Will Blockchain Change Banking?

August 08 21:02 2019
Deltec Bank - How Will Blockchain Change Banking?

Blockchain makes it fast and easy to complete transactions. 

We often associate blockchain with cryptocurrency, which means it and Bitcoin are usually in the same conversation. What is not always recognized is this technology’s ability to transform mainstream payments.

You will see banking services using blockchain soon.

Why Will Banks Embrace Blockchain?

Blockchain maintains an accurate history of operations. There are multiple copies of the ledger, making it virtually impossible to delete or alter transactions.

You cannot add new information that is false to it either. The only way this effort could be successful is if you changed every ledger copy at every location.

That would mean someone would need the capability of hacking thousands of computers simultaneously.

This benefit is only one of many that banks are looking at as they begin to embrace the idea of blockchain more often.

1. Money Transfers

It is challenging to send money to another country without encountering distribution issues. Banks are already using blockchain in this area for remittances. This benefit minimizes institutional exposure, saves time, and reduces the expense of cross-border payments.

2. Direct Payments

Sending and receiving payments involves the movement of funds through banks, credit card networks, and other parties. Every additional step adds complexity and cost because each provider expects a fee. Blockchain creates a cheaper, more direct payment route that saves everyone money.

3. Funds Verification

Bouncing checks is still a problem for some merchants. It causes losses and fees that can hurt their bottom line. Blockchain makes it possible to verify the availability of funds in a few minutes. This benefit includes electronic payments from a checking account.

4. Transaction Details

It is far easier to track ownership of a transaction with blockchain. The challenge of tampering with ledgers combined with smart contracts that monitor when buyers make a payment creates a secure experience for all parties. Assuming that the programming is correct, this benefit creates a mistake-free environment.

5. Fraud Reduction

Blockchain resists multiple forms of financial fraud. DDOS attacks, hacking, and other types of illicit activity are quickly stopped because digital IDs make it easier to identify individuals. When there are fewer losses, the cost of business goes down. Everyone in the banking industry saves money – including the customer.

6. Financial Inclusion

Some businesses avoid the banking industry because of high fees. Lack of access and minimum balance requirements are barriers to entry as well. Blockchain promotes inclusion because it keeps costs low. You can use a mobile device instead of needing a regular income or assets for collateral.

When Will Banks Incorporate Blockchain?

Blockchain technologies are still somewhat new, even though some banking industry institutions use it for specific transaction types. That means its use is ahead of the privacy and protection regulations that are necessary for service expansion in this area. This issue is why there is hesitation to pursue it, especially at the local level.

Even with this uncertainty present, blockchain is coming in the next five years to the banking sector. Those who invest in it today are going to become tomorrow’s industry leaders.

Disclaimer:  The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.

About Deltec Bank

Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.

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