{"id":5199,"date":"2017-08-05T00:06:48","date_gmt":"2017-08-04T18:36:48","guid":{"rendered":"http:\/\/www.allerin.com\/blog\/?p=5199"},"modified":"2017-08-01T16:11:09","modified_gmt":"2017-08-01T10:41:09","slug":"application-of-blockchain-in-banks-is-materializing-into-a-prospective-turbulent-force-that-can-transform-the-financial-services-industry-by-making-transactions-faster-cheaper-more-transparent-and","status":"publish","type":"post","link":"https:\/\/www.allerin.com\/blog\/application-of-blockchain-in-banks-is-materializing-into-a-prospective-turbulent-force-that-can-transform-the-financial-services-industry-by-making-transactions-faster-cheaper-more-transparent-and\/","title":{"rendered":"Are banks ready to use blockchain?"},"content":{"rendered":"<p><a href=\"http:\/\/www.allerin.com\/wp-blog\/wp-content\/uploads\/2017\/08\/Are-banks-ready-to-use-blockchain.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5337\" src=\"http:\/\/www.allerin.com\/wp-blog\/wp-content\/uploads\/2017\/08\/Are-banks-ready-to-use-blockchain.jpg\" alt=\"\" width=\"770\" height=\"513\" srcset=\"https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/Are-banks-ready-to-use-blockchain.jpg 770w, https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/Are-banks-ready-to-use-blockchain-300x200.jpg 300w, https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/Are-banks-ready-to-use-blockchain-768x512.jpg 768w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\" \/><\/a><\/p>\n<p>The banking industry plays an important role in a country<em>\u2019<\/em>s economy by facilitating areas and opportunities to invest beyond cash in hand and also to earn on deposits<em>. <\/em>For this, it needs a state-of-the-art, robust infrastructure<em>. <\/em><a href=\"https:\/\/www.allerin.com\/blog\/how-to-systematically-use-blockchain-technology-in-payment-systems\" target=\"_blank\" rel=\"noopener\">Blockchain in banks<\/a> can make this possible and help deliver more reliable and efficient transactions<em>. <\/em>Moreover, it can decentralize financial proceedings by creating a tamper<em>&#8211;<\/em>free ledger that records transactions in a public or private peer-to-peer network. All these transaction blocks are linked from the beginning to the end, due to which information cannot be altered in any one block, thus reducing the risk of leaking any data.<\/p>\n<p><a href=\"http:\/\/www.allerin.com\/wp-blog\/wp-content\/uploads\/2017\/08\/5.8.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-5301 size-full\" src=\"http:\/\/www.allerin.com\/wp-blog\/wp-content\/uploads\/2017\/08\/5.8.jpg\" alt=\"\" width=\"771\" height=\"525\" srcset=\"https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/5.8.jpg 771w, https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/5.8-300x204.jpg 300w, https:\/\/www.allerin.com\/blog\/wp-content\/uploads\/2017\/08\/5.8-768x523.jpg 768w\" sizes=\"auto, (max-width: 771px) 100vw, 771px\" \/><\/a><\/p>\n<p><strong>How will banks benefit with blockchains?<\/strong><\/p>\n<h6><\/h6>\n<p><a href=\"http:\/\/www.hongkiat.com\/blog\/digital-wallets\/\" target=\"_blank\" rel=\"noopener\">Blockchains can help banks<\/a> increase the speed of transactions and reduce the cost of activities by automating back-office functions that can later be shared across all banks on the network. Blockchain is decentralized, where the private details of a customer cannot be shared without her permission, thus enabling privacy. It also prevents possibilities of a \u2018double-spend\u2019 by using cryptography; so blocks are formed and then immediately encrypted. Breaking this encryption is not viable for hackers.<\/p>\n<h6><\/h6>\n<p>Blockchain helps <a href=\"https:\/\/ripple.com\/files\/xrp_cost_model_paper.pdf\" target=\"_blank\" rel=\"noopener\">minimize infrastructure costs for banks<\/a>, the involvement of any middlemen, and the need for transaction fees. For clearing and final settlements, while Internet transactions can take days, the blockchain can significantly reduce the transaction time to minutes and also offer 24\/7 processing.<\/p>\n<h6><\/h6>\n<p><strong>What<\/strong> <strong>inhibits use of blockchain in banks?<\/strong><\/p>\n<h6><\/h6>\n<p>Blockchain promises to provide an online ledger that can store details of a large number of users; and it is next to impossible to hack these details. This appealed to financial institutions in the beginning but soon they realized the difficulties to put it into practice.<\/p>\n<h6><\/h6>\n<p>Although blockchain ensures safe transactions that cannot be reversed, it somehow does not go well with the privacy needs of the secretive bankers who want to use it for purposes other than bitcoin. Moreover, banks are not quite sure about the <a href=\"http:\/\/fc16.ifca.ai\/bitcoin\/papers\/CDE+16.pdf\" target=\"_blank\" rel=\"noopener\">scalability of blockchain technology<\/a>. Since most banks are connected to each other through a central banking system online, they fear about the data being duplicated using a shared settlement system.<\/p>\n<h6><\/h6>\n<p>Blockchain has not only provided a safe and secure platform to transact but has also helped mitigate a lot of other problems, which was not possible before its advent. However, its still needs to diminish the other challenges, as mentioned above, which are discouraging its adoption. As for banks, they should weigh the benefits and the challenges associated with this technology against their existing landscape to make a decision.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The banking industry plays an important role in a country\u2019s economy by facilitating areas and opportunities to invest beyond cash in hand and also to earn on deposits. For this,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":5337,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[171],"tags":[402],"class_list":["post-5199","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain","tag-blockchain-in-banks"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.5 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Are banks ready to use blockchain? | Blockchain in Banks |<\/title>\n<meta name=\"description\" content=\"The banking industry plays an important role in a country\u2019s economy by facilitating areas and opportunities to invest beyond cash in hand and also to earn\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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