Blockchain in Financial Services
Five emerging blockchain technologies in financial services are:
Let’s discuss them in detail.
1. Cross-Border Payments
Because banks charge a fee for each transfer, transferring goods or payments across borders becomes costly and time-consuming. For example, if funds must be transferred from the United States to Russia, the transfer must pass through one or more financial institutions before reaching the intended recipient.
Individuals can use blockchain to send and receive money with minimal involvement from third parties. Furthermore, cross-border payments can be settled quickly and cost-effectively using blockchain payment systems supported by blockchain networks such as Stellar and Ripple.
2. Lending Platforms
Before blockchain, people needed intermediaries to establish trust and complete transactions. Using immutable smart contracts, borrowers can directly negotiate the rate of interest, installments, and duration of the transaction with lenders using blockchain in finance.
Smart contracts allow borrowers and lenders to negotiate terms. If borrowers fail to meet the terms, the smart contract adds late payment fees to the total amount owed to the lender.
3. Invoice Management and Billing Solution
Companies are embracing electronic invoicing, but they lack the standards required to carry out invoice-backed financing efficiently.
领英推荐
Companies using blockchain in finance can upload invoices to the blockchain using smart contracts. The blockchain can store information such as payment due date, amount to be paid, and client details. When the individual pays the bill, the smart contract changes the invoice status to "paid" and notifies the companies that the payment has been made. Blockchain in financial services can help determine whether a client is safe to trade with.
4. Fund Investment
Investing in funds is currently time-consuming and costly. The current procedure entails manual processes that make use of multiple databases.
Providers can use blockchain in finance to store the user's legal, personal, and public information on a blockchain.?
It could: reduce the likelihood of errors and fraud, Increase transparency and make data more accessible.
The fund investment companies can quickly retrieve the user's information using an immutable smart contract. Access would be denied if a user denied sharing the data. Users can also keep track of who is using the data and for what purpose. As a result, blockchain in financial services can improve transparency in the fund investment process.
5. Financial Record Keeping or Bookkeeping
Companies are planning to use blockchain to store the immutable records of finance-related information like:
The smart contract grants various shareholders access to the relevant information. Shareholders, for example, should have access to confidential information, whereas interested parties should only have access to public information.
As a result, blockchain in financial services assists companies in bringing transparency to financial systems.