How Does Blockchain Technology Change The Security Landscape In The Finance Sector

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How Does Blockchain Technology Change the
Security Landscape in The Finance Sector?
With the emergence of blockchain, the finance
sector is presently witnessing a massive
transformation. The financial service sector and
blockchain share a complex relationship, where,
on one side of the coin, blockchain offers
several opportunities to evolve how people
exchange currency. While on the other side,
blockchain is seen as a threat to the current
established models of banking. Blockchain is a
dist ributed digital ledger recording
transactions which are tamper-proof. Several
conventional banking processes thus could be
modernized.
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Image Source It is hard to ignore the benefits
that the blockchain provides over the entire
spectrum of financial services today. Whether it
is settlements or payments, these benefits
include security, cost-effectiveness,
decentralization and immutability. The NASDAQ
Chief, Bob Greifeld predicted how the global
economy would be disrupted when he said
Blockchain technology continues to redefine not
only how the exchange sector operates, but the
global financial economy as a whole. Financial
giants like MasterCard, Standard Chartered, Visa
are all reportedly keen on blockchain and its
impact in catapulting them to the next level of
growth. FinTech space in general is gung-ho
about the blockchain technologys future. FinTech
has already marked its presence by contributing
in crucial ar eas like payment gateways, online
forex trading and also bitcoin transactions.
Their next vision being the financial
services. Mainstream banks all over the world
have been waging battle at various fronts,
largely due diminishing returns and
profitability. With blockchain, banks are all set
to lock horns with FinTech players, highly agile
and capable, in order to gain the upper hand and
offset their shortcomings. FinTech players are
posing a threat to the bank in areas such as Peer
-to-peer lending, AI assisted services, crowd
funding and they are far better positioned,
mostly because of their high agility and
customer- centric processes, to mount a serious
challenge to present day banks who are marred by
operational issues and are finding it very hard
to keep up with cost pressure.
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PROBLEMS IN THE CURRENT FINANCE SECTOR

• Firstly, because it is way too old and is an
  assemblage of paper -based processes along with
  industrial technologies wrapped up digitally.
• Because it is centralized, it is vulnerable to
  system failures, cyber threats and resistant to
  change.
• The current financial system is restrictive. It
  denies access to basic financial tools to
  millions of people out there in the world.
• High transactional fees
• Is it all about trust?
• The primary issue with digital economy is trust.
  Frequent data breaches and cyber intrusions
  impact trust. The businesses that depend largely
  on centralized data pools are vulnerable to
  disruption providing further impetus to adoption
  of Blockchain.
• SO, HOW DOES BLOCKCHAIN SOLVE THESE PROBLEMS??
• FRAUD REDUCTION
• According to well-known statistics, nearly 40 of
  different financial third parties, like stock
  exchanges, money transfer services, other payment
  networks, undergo economic crimes.
• Blockchain follows a decentralized approach
  whereas most of the banks and other financial
  organizations are based on a centralized data
  base. Centralized database makes the finance
  sector vulnerable to cyber threats.
• KYC (Know Your Customer)
• According to a well-known survey, financial
  companies spend anywhere between 65 -
• 400 million per annum to keep up with KYC. KYC
  helps various businesses to identify and verify
  their clients. Blockchain would enable
  independent verification of individual from one
  enterprise to be accessed by other enterprises.
• Payments

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Capgemini, which is a consultancy estimated that
the customers could save almost up to some 15
billion in insurance and banking fees per year
using the blockchain based solutions. Santander,
which is a European bank quoted that Blockchain
Technology can save banks up to 20 billion per
year. Trading platforms It would really be
exciting to consider the transformation that
would take place in the trading platforms with
blockchain deployment. NASDAQ is already
exploring blockchain to further enhance its
efficiency. Smart Contracts Since we can store
any kind of digital data including computer codes
on a blockchain, it enables smart contracts. Is
this the end of the conventional banking as we
know it? This would depend on the how finance
reacts to the emergence of blockchain. Blockchain
technology is n ot an existential threat for
those who make sense of the new technology
model. The seemingly invincible force of
blockchain is poised to change this industry. The
crucial factor that would determine if the
finance sector will swim or sink is how well do
th ey respond to the digital disruption taking
place. The finance sector will emerge as a winner
only if they transform, build a vision and align
with this vision to disrupt, keeping themselves
customer-centric. Personally, we would want this
innovative FinTe ch technology transform the
conventional banking into a prosperity platform
for one and for all. Accelerate innovation,
reimagine and transform your business with our
blockchain solutions. Request a consultation and
get in touch with us at inquiry_at_cygnetinfotech.com
.