Five Ways to Use Blockchain Technology in Financial Services

Blockchain technology was designed to make banking services easier to manage. The secure distribution of funds through blockchain can provide you with the peace of mind you need to operate your financial service successfully.

There are five primary ways for you to use blockchain technology. These methods of use are universal, regardless of the service you are providing to consumers. From equally distributing information to boosting your payment security and expanding your global outreach, blockchain can enhance the financial experience for both you and your customers alike. This article provides a detailed description of how you can implement each of these beneficial tools to enhance your financial service with a few simple steps.

Equally Distribute Information on a Combined Ledger

If multiple trading partners oversee your financial service, you can use blockchain to create an easy to use combined ledger for everyone to use and update when needed. The combined ledger feature overseen by blockchain technology can help you and your partners transfer currency quickly and efficiently while reducing the prospect of any potential security issues. When you make your blockchain ledger public, you allow each contributing partner to receive an accurate overview of the transactions taking place.

By having a public ledger, you are ensuring each trading partner has an updated list of transactions being made each day.  In doing so, you are increasing your ability to communicate more effectively, as there are never any questions regarding whether a payment has been made. A trading partner simply needs to access the public ledger at his or her earliest convenience to ensure a payment he or she requested was successfully transferred.

You do not have to worry about altering each individual partner’s blockchain ledger, as the system automatically updates the transactions for everyone who has access to the public account. Once a transaction has been published in the public ledger, it is copied to each partner included within the original ledger. The blockchain technology takes care of the system automatically, meaning you do not have to worry about keeping an account of your ledger on your own.

Keep Your Information Accurate and Difficult to Change

An added benefit of using blockchain technology for your financial service is the security it provides you in terms of keeping your information as accurate as possible. Due to the nature of the blockchain ledger, it is extremely difficult to modify any transactions, as they are immediately sent to multiple platforms to reach each contributing partner. No one is in direct control of the ledger—blockchain automatically updates the files when a transaction occurs, meaning a partner cannot alter the information once it has been input within the system’s technology.

Related Article: Types of Cryptocurrency

If a lending partner wanted to change information on the ledger or falsify a transaction, he or she would need to change every single ledger one at a time to achieve this goal. Blockchain renders this possibility implausible, as a single user is not granted the authority to update the ledger once it has become publicly posted. The only way a partner could feasibly alter the blockchain ledger is to hack into thousands of computers at the same time, which means you do not reasonably have to worry about the prospect of receiving an inaccurate ledger.

Expand Your Global Outreach

When you are running a financial service, it is important to consider how you want to approach reaching customers across the globe to expand your business. With blockchain, you can send money to consumers and businesses anywhere in the world. With this technology, you are effectively eliminating the need for money transfer offices.

If you have a customer living in the United States who needs to transfer money to a family member who lives internationally, he or she may conduct the transfer electronically through a mobile telephone. Blockchain technology allows for the transfer to take place automatically and reduces the fees associated with making an international transfer from one account to another. This helps you save money for your financial service while simultaneously protecting your business by minimizing the need for payments through cryptocurrency.

Boost Payment Security

Payment security is a primary concern for any financial service. Using blockchain technology for your business can help you boost your overall security when payments are being made. For example, if one of your customers is paying with a check and has insufficient funds to cover a check they have made, the check bounces and you lose the payment. When this happens, the amount of time before you receive payment increases. This can create a ripple effect of issues on your end.

Customers who pay through the blockchain technology receive notification within a few minutes or less. These notifications alert them as to whether they have enough funds for the payment they are making. This allows them to alter their payment method before completing a transaction with your financial service. Your payments then occur within an appropriate timeline and are conducted through a secure platform, allowing you to receive the money you requested on time.

Use Blockchain for More Than Transferring Funds

In addition to using blockchain to transfer funds, increase your ledger security and connect with global customers, you can use the technology to create smarter contracts for your business. When you draft a contract with Blockchain, the technology safely monitors when a buyer makes a payment or when a seller delivers product. This reduces the amount of time you must spend monitoring these contracts independently, as the blockchain system oversees the process for you.

You can create a smart contract that is as simple or complex as you need it to be. Your business can create a contract between one buyer and seller or you may choose to develop a smart contact involving an interconnected web of users.

Related Article: Cryptocurrency Exchange Platforms

It might also interest you: