Blockchain - a revolutionary technology is grabbing more attention these days since it is going to be a game changer in financial sector. Eventually, Blockchain was developed to support crypto-currency transfer but several researches in the Fintech industry evaluates on how to effectively use Blockchain technology to optimize conventional transaction processes and cut down cost.
In general, an international money transaction takes 3-7 days but Blockchain can perform the same transaction within 10 minutes with promising security. Additionally, Blockchain reduces the cost incurred during b2b, b2c or even c2c transaction. In the conventional method, several companies act as middleman in processing international transactions but Blockchain will lay off those middleman and hence reduce the cost. Hence, it is obvious as to how disruptive this could be thereby challenging the existence of institutions like Western Union Money Transfer and MoneyGram.
According to Banco Santander, a group working on creating its own virtual currency says, "Banking industry could save $15 billion to $20 billion in transaction costs for international payments by using the technology"
Banks - It is time for you to act proactively!!
If in long run cryptocurrencies like bitcoin become popular, Blockchain may pose a threat to the banking industry. By using this technology, digital currencies could be sent or received between the sender and receiver directly without any third party intervention. In such a situation, there is limited role for banks in processing or authenticating any transactions. However reaching out to common people will take some time sparing enough scope for the banks to think through.
In India Fintech startups are emerging to provide a solution to the financial sector such as Zebpay, Unocoin and Blockonomics. Several venture capitalist are investing in these startups to unleash the potential of Blockchain. Several involvements are happening in and around India to make people engaged in Blockchain. Last year, a two-day event was conducted on Blockchain technology in the month of August at the Bombay Stock Exchange to introduce developers to the new technology ecosystem thereby facilitating innovation amongst existing fintech APIs and to create impact.
Currently, Blockchain is in its early stage and is difficult to come to a conclusion. If its potential is identified and implemented to the fullest going ahead, this could lead to breaking the traditional banking rules.