Cryptocurrencies have been disrupting the global economy even more than usual lately, shifting from an emerging financial model for the tech-conscious to a nearly mainstream technology. Now, blockchain, a capability behind the rise of cryptocurrency, could become transformative in sectors such as financial services.
As blockchain rises, a wave of BlockFin services – financial solutions based on blockchain – are beginning to emerge. These pilot projects could hold insights into the future of the industry.
What is blockchain?
In simplest terms, blockchain is a powerful digital ledger that automatically tracks transactions that are completed within the platform. If you build blockchain into an application, for example, then every financial interaction that exists in the system would be added to the ledger.
This may not sound revolutionary, but blockchain stands out because it is designed to be uniquely open and secure. All data is encrypted and protected against tampering, but can be viewed by any stakeholder. The result is transparency that is incredibly difficult to match in a traditional financial services model.
How blockchain impacts banking
The financial services sector is exploring blockchain for its potential to simplify many processes related to regulatory compliance and expand the reach of financial services model. One Forbes report highlighted services that could provide ATMs specifically for cryptocurrencies or use drones to deliver financial services to the underserved, all with blockchain at the foundation.
These types of opportunities are possible because blockchain allows for secure transactions without the need for the same robust, complex support systems that often exist in the sector. If a user has access to a digital payment system, chances are that individual can securely interact with a blockchain-based system.
“Blockchain is emerging faster than most technologies.”
As of now, however, most blockchain-related projects remain in the early stages – but it’s time for change.
A PricewaterhouseCoopers report explained that many innovators in the sector began exploring blockchain with small projects in 2017 and are using those as pilot programs to identify how to progress. In response, the rest of the sector seems to be sitting back and watching so they can get some idea of how to proceed.
This strategy, however, presents a few problems, according to the news source. First, blockchain is emerging faster than most technologies, so companies that do sit back and wait could find themselves so far behind the curve that they struggle to catch up. Other issues include the time it takes to get buy-in from key stakeholders, set up a tech foundation to support blockchain and figure out where the regulatory sector will fall on the solution.
Analytics platforms can help set a basis for the digital innovation needed to support blockchain. The reality is that no solution in today’s IT climate operates in isolation. They’re all dependent on data and can feed big data systems key information.
Firms that get moving on analytics now can start to digitize their processes and lay the base they need to take advantage of blockchain as the opportunities emerge. Contact GDS Link today to learn how.