What is the importance of Blockchain in the financial sector?
Blockchain has offered support on a wide range of use cases for financial institutions, including trade finance, remittances, syndicated loans, loyalty programs and KYC registries, to name a few.
In the financial sector specifically, several banks have managed to develop Blockchain-based platforms in order to help optimize internal processes, gain access to digital records, reduce manual processes, increase the speed to process transactions and reduce overall risk and fraud due to increased traceability and transparency of all transactions.
This technology enables the financial sector to worry less about its costs, fraud and time and focus more on advancing technical solutions as well as catering to customer needs and ensuring a streamlined customer journey.
How can Blockchain technology stimulate small and medium-sized businesses?
Blockchain technology can potentially drop many transaction costs by eliminating third parties and intermediaries, giving a leeway for small and medium-sized businesses to flourish in their respective markets. For example, small enterprises can benefit from low-cost, searchable databases, can reduce the costs of contracting via smart contracts and can even eliminate agency fees and co-ordinating costs, potentially enabling these small businesses to exponentially grow and thrive in a competing market.
Additionally, Blockchain is creating an enhanced sharing economy by creating a direct link between suppliers and buyers via a well-trusted platform, which allows for co-operatives, or autonomous associations, to be formed and controlled by people who come together to meet common needs. Accordingly, small and medium-sized businesses no longer face barriers to enter a market and can benefit from the increased revenue streams resulting from a bigger pool of customers as well as reduced costs due to lack of intermediaries.
What role is Booz Allen Hamilton playing when it comes to Blockchain technology and what are your plans, if any, in this regard?
Booz Allen Hamilton is leveraging its expertise across different industries in order to support Blockchain adoption in the financial services industry. We have supported the integration of Blockchain and distributed ledger technology in a leading global stock exchange, as well as utilized Blockchain technology to improve liquidity and reduce the occurrence of real estate transactions using fraudulent deeds.
Furthermore, we have supported several industries internationally such as disaster relief organizations where we have created a Blockchain-based system in order to allow these organizations to efficiently and effectively monitor the distribution status of supplies in real time with guaranteed accuracy and security in emergency situations.
Specifically in the region, we are focusing on working closely with financial services institutions to develop business cases for where Blockchain can be leveraged, in the specific context of their business.
Please mention the practical benefits of Blockchain technology in banks and your predictions of market growth.
Blockchain technology offers practical benefits to a wide range of sectors, including the banking industry. Specifically, the benefits which Blockchain technology can offer both financial institutions as well as users include:
Cost-efficiency: Financial institutions can benefit from reduced costs and fees due to the lack of required intermediary and associated overhead costs.
Durability and Reliability: Due to decentralized networks, Blockchain does not have a central point of failure and is better able to withstand malicious attacks.
Enhanced Security and Privacy: Parties are able to make an exchange without the oversight or intermediation of a third party, strongly reducing counterparty risk.
Ensured transparency: Changes to public Blockchains are publicly viewable by all parties, which ensure that all transactions are immutable.
Faster transactions: Blockchain transactions can be processed in near real-time around the clock.
The market will inevitably grow when it comes to Blockchain technology, taking into consideration the potential cost and time savings this technology can bring to the industry as well as the fact that several banks have already spearheaded several initiatives, inviting the rest of the market to get up to speed.
This article is from BQ Magazine’s Issue 43 – April 2017.
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