Many organizations are refining themselves using modern technologies, right from basic productivity tools to cloud-based cybersecurity solutions.
An organization-wide transformation involves:
- Creating new business models based on new markets and digital assets.
- Increasing the accountability of business networks.
- Upgrading legacy systems that are sluggish or prone to risk and fraud.
One of the most advanced technologies that your business can harness in a now-growing economy is blockchain.
It is no secret that blockchain is already changing the way you do business. The degree to which blockchain will influence the future business environment continues to play an important role in strategizing a business roadmap. Blockchain benefits businesses and can make wonders for businesses that need to carry out frequent transactions from outside their ecosystem.
Authorized entities can access the same information concurrently using distributed ledger technology offered by blockchain. It drives efficiency, builds trust, and minimizes friction. Additionally, blockchain enables fast scaling and adaptation of various business solutions allowing stakeholders to tailor those solutions for multiple jobs across departments.
Discuss Blockchain Advantage for Businesses
This post will discuss three key blockchain-powered digital transformations in business across multiple industries and detail these blockchain benefits for businesses. These examples will encourage you to investigate potential possibilities to explore blockchain technology for your own business.
Decentralized Finance (DeFi) is a set of concepts to refine lending, banking, and associated operations. DeFi enhances conventional financial services by eliminating centralized third parties like banks, brokers, and exchanges.
It leverages smart contracts for traditional financial services that rely on blockchain systems, like Ethereum. While there are instances of crypto exchange hacks, securing your bitcoin holding using the best bitcoin wallets will help eliminate the risk of cryptocurrency fraud.
Blockchain technology allows a finance company to trade directly, thus minimizing settlement friction. Additionally, the distributed and immutable nature of the blockchain’s ledger simplifies operations and reporting systems for government agencies and audit committees. Blockchain experts believe that it will not replace an existing financial markets ecosystem; rather, it will re-engineer techniques to solve latency and security issues.
Investment banks and their customers can rely on blockchain-based DeFi to address inefficient and sluggish back-office operations that contribute to settlement delays. Recently, consortiums such as the Linux Foundation have been focusing on solutions that integrate technology and financial market businesses in establishing new standards for blockchain implementation in these sectors.
Traditional banks are also hunting foolproof methods to enhance customer service and provide value while minimizing reconciliation and operational expenses. For instance, Barclays in the United Kingdom is experimenting with using blockchain to accelerate back-office processes and settlement, claiming they can save up to $20 billion by eliminating intermediaries.
Here are some of the top use cases of blockchain for the banking and finance sectors:
Verifying Customer Details for ‘Know your customer (KYC)
Financial businesses have stringent regulations when it comes to the onboarding process. They usually prefer to follow the ‘Know Your Customer (KYC)’ process, which involves verifying the identification documents of individuals. According to a survey, the average client onboarding time for financial institutions is expected to be 26 days, and for corporate customers, it can go up to 32 days. Moreover, the average cost of KYC procedures for each financial institution is predicted to be $48 million annually.
The onboarding and KYC process can be automated with blockchain as it also provides security and transparency. For loan officers, banks, and consumers, blockchain offers a real-time database for KYC-related client information. The blockchain, as a decentralized and secure ledger, enables the storage and interchange of KYC-related data. Banks will invest less time verifying the customer’s source of funding, financial status, and business goals.
Reaching the Unbanked Population
Around two billion people on the planet still lack access to banking services. Although most belong to low-income, emerging economies, this issue persists in high-income countries such as the United States, where 14.1% of individuals are unbanked.
With blockchain, financial institutes can provide a digital identity to individuals to access bank accounts and financial markets. These institutions can leverage the high degree of security blockchain networks offer to carry out financial transactions swiftly and securely without involving any middlemen for payments.
Customers benefit from the immutable nature of the privacy blockchain, which guarantees their security while making or accepting money. If clients have access to a device capable of accessing eWallets, running the technology is very inexpensive. Additionally, it unlocks alternative digital payment options through available wallets that are optimized for use with blockchains like Ethereum.
Most significantly, blockchain enables people to carry their physical, digital identity whenever they make local or international money transfers. Fundamentally, blockchain technology comes to the rescue by addressing some issues that were stumbling blocks for traditional financial institutions.
Historically, trade finances involve lengthy procedures that often disrupt operations and make liquidity management difficult. The transaction consists in transmitting key information like fund origin country, product specifications, and much more that produces a large amount of paperwork.
Blockchain technology removes the need for middlemen, decreasing the time required to settle globally, and eliminating paperwork for cross-border payments from days to milliseconds, thus saving money and mitigating counterparty risk. It addresses issues such as the lack of transparency for international transactions and gaining trust amongst the parties involved in such transfers.
The blockchain-compatible health data comprises demographic data like age, gender, and possibly basic medical history data such as vaccination history or vital signs. None of this information can be used to identify any single patient on its own precisely. Implementing blockchain would keep such data in a distributed ledger that many people can view without causing excessive privacy issues.
As specialized networked medical devices are becoming more prevalent and more linked to an individual’s health data, blockchain technology may be used to connect such devices to the record. Such devices can save and add data produced on a healthcare blockchain to individual medical records.
Healthcare professionals need to rely on a range of complex, data-intensive processes that require robust data management and trust mechanisms. Blockchain technology can simplify and automate these processes in many instances, from months to days — and provides a single, immutable source of truth that can be accessed, updated, shared, and audited securely.
The healthcare sector also needs to overcome the challenge of siloed data that the linked medical devices produce. Blockchain technology provides the necessary integration for removing those silos to help medical practitioners make key decisions faster. This use of blockchain in the healthcare business also makes other benefits for the healthcare business.
Numerous companies in the retail and agricultural sectors need to have more supply chain visibility to guarantee compliance with quality requirements.
Using blockchain technology for supply chain management enables key decision-makers to monitor products from the moment of manufacture and throughout the supply chain, consumers get complete insight and transparency into purchasing goods. This is a major concern for the business, particularly in emerging countries, where counterfeit prescription medications are responsible for thousands of fatalities each year.
When blockchain technology is utilized for record-keeping, assets like inventory units, waybills, orders, etc., are assigned unique IDs that function as digital tokens (like bitcoins). Additionally, blockchain members can use these unique identities or digital signatures to authenticate the blockchain blocks. The blockchain then records each stage of the transaction to transfer the appropriate token from one participant to another.
The common IT infrastructure created by blockchain networks streamlines supply chain processes for all parties. From the point of origin to the point of consumption, products and commodities are transparent, traceable, and accountable thanks to blockchain technology. The advantage of blockchain is tremendous for the healthcare business.
Without a strategic assessment of the value at risk or the possibility of capturing it, unstructured experimentation with blockchain solutions will keep businesses away as they see no significant return on investment.
Also, blockchain is highly misunderstood as a technology and is considered more suitable for large, established businesses. But it is already coming up as a viable alternative for a few conventional financial and insurance companies. And as seen in this post, small businesses in other industries can also adopt blockchain to unlock some competitive advantages along with other benefits.