In 2016, the The International Securities Association for Institutional Trade Communication released the results of its annual member survey looking at the future of the global financial industry.
According to the report, 62 percent of firms saw investment in technology as a top area of focus in 2016-2017. Specifically, the firms cited increased interest in blockchain and cybersecurity technology. And the survey indicated that 55 percent of firms were monitoring, researching or already developing solutions for blockchain technology at the time.
A blockchain, is a growing list of records, called blocks, which are linked using cryptography. Blockchain technology is especially suited to the financial industry because it provides a cryptographically secure way of transferring digital assets.
Since 2016, interest in blockchain technology in the financial industry has only increased. Over the last few years, blockchain has entered the mainstream with the rise of digital currencies backed by the technology. Last year, cryptocurrency Bitcoin was often a trending topic in the financial industry as investors watched its price skyrocket, before dropping drastically earlier this year. And despite Bitcoin’s rise and fall, new cryptocurrencies are being created everyday.
Outside of the digital currency realm, many traditional financial institutions are adopting the technology to simplify their operations and cut costs. And according to a 2018 report by global management consulting firm Accenture, the world banking sector is poised to save as much as $20 billion by 2022 by implementing blockchain.
While some financial institutions might be hesitant to implement what is still a relatively new technology, others have recognized the implications blockchain has for the banking industry. Those institutions that don’t find ways to integrate blockchain into their operations could very well be left behind.
Here are three ways blockchain is disrupting the banking industry:
Blockchain eliminates the need for third parties in financial transactions, which is why many have predicted it could eliminate the need for banks all together. But banking institutions can use the technology to automate their processes and free up valuable resources. For consumers, this could mean faster payments and lower fees. Similarly, blockchain technology could make transactions between financial institutions more efficient as well.
Blockchain has created a new funding model for startups looking to raise capital or any company or organization looking for a new way to fundraise. Like other crowd funding methods, initial coin offerings, backed by blockchain, give the public an opportunity to invest in a company in exchange for goods, services or a monetary return on their investment. But unlike other kinds of crowd funding, blockchain technology gives users immediate access to the funds they collect without unnecessary fees paid to a third party.
The digital currency markets remains largely unregulated, which means those trading in this realm are able to set their own rules. This presents a unique opportunity for those seeking loans or lines of credit outside of traditional lending institutions. Often times high interest rates and fees associated with borrowing money can be barriers to people already in tight spot. But digital currency lenders can set their own terms for repayment because they are not bound by the traditional market factors that dictate the interest rates and lending fees set by banks.
Treehouse Technology Group is working with companies to help them harness the power of blockchain technology. We’ve worked with several groups to integrate this innovative technology, increasing efficiency and freeing up valuable resources. If you’re interested in transforming your operation and want to work with a company with a successful track record, contact TTG for a free consultation. We specialize in helping companies develop robust solutions best suited for their specific business needs.