Blockchain is today’s most discussed technology and will remain so for more time. Crypto Society most often criticizes banks for being over-centralized and many times being overpriced and monopolistic. In contrast, Blockchain can be a viable option as it is decentralized and a cost-effective solution.
Existing Banking and Payment Systems are centralized and so are extra complex. The extra complexity creates extra risk which can be reduced by technology like Blockchain as Blockchain can help in reducing complexity by reducing intermediation. Once underlying risks are reduced, the blockchain can help in introducing multiple products against limited options available with the banks today and thus increasing competitiveness at a lesser cost. This can also help in introducing more transparency in the financial system.
Blockchain can reduce operational costs for clearance and settlement systems and making transaction more secure at nearly real-time. By easing out fundraising, Blockchain can help in managing Asset and Liability mismatch. By removing intermediaries, faster and more secure payment systems can be designed at a minimal fees for consumers. Loans and advances can be made cheaper and secure by removing intermediaries. Blockchain can also enhance efficiency and effectiveness of Securities and Capital Market. Blockchain’s distributed ledger will make accounting and auditing simpler by reducing complexity.
Is that the end of world for Banks or banks will be constrained to use Tokenized Cheques and Decentralized Ledger? And if yes, whether this transition will be easier for Banks or Banks will feel disoriented.
With this magnitude, Blockchain should be able to create an entire financial system in some time. I strongly believe that Blockchain can minimize the inefficiency of banking system and should act as a supplement and complement to the Banking System. Costs for consumers will decrease and there will be reduction in fraud.
Supporters of Crypto Society do argue that Blockchain will replace banks altogether. Blockchain technology is still in infancy stage and its impact on Banking System remains to be seen. But it is certain that If Blockchain cannot replace the Banking industry, it will definitely transform the Banking industry.
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