The financial world is about to be revolutionised by the new and easy ways of dealing with finances brought by technology. Fintech, Proptech, Bitcoin, Ripple, Ethereum, IOTA and Blockchain are some of the new ‘Disruptive Innovation’ technologies, whose application significantly affects the way the market functions. Change comes in every field in a time when most people need it, and it comes only to improve our lives and make them easier.

The Distributed Ledger Disruption
One of the current disruptive innovations is the Blockchain (distributed ledger) – the technology under Bitcoin, which will significantly alter the way banks and financing function. If they continue the traditional way of operating, banks will become an obsolete institution, as people will have numerous other options for administrating their finances or obtaining money for professional or personal investments. In order to continue functioning, banks will have to adapt to new technologies. With millions of people seeking investments and mortgages, they can’t afford to be out of the game.
The Blockchain revolution is the perfect answer for optimising and making an automated approach with the back-end operations of all the banking institutions, which creates an effective evaluation of data and a fast issuance of loans. The change will have a great impact on all the people who are investing or using bank accounts. Being a distributed ledger that is almost impossible to hack, Blockchain makes the digital currency more flexible for investors.

Advantage for Investors
Blockchain’s evolution made it possible for each global investor to have a cheaper process in terms of share trading and settlement reasons. This way, investors can make transactions rather than keep the record in the central authority. This is an easy method of making investment transactions in banks, without the trouble of keeping a record of the previous investments.

Issuing Loans Becomes Easier
The use of a distributed ledger makes the process of issuing loans much easier for bankers. Blockchain makes loan issuing simple and fast and it also provides the security needed to make the loan.
A faster process of obtaining a loan is an advantage for all the clients who need money urgent. Also, banks would have an accurate process applied for a large scale of clients in the global market. This will bring great opportunities for more clients to fast access and secure way of having their loan granted when they need it.

Data Privacy
All the people involved in business, banking or finance want the privacy of using their data and Blockchain can offer that through the distributed ledger. This way, you are securing your finance and bank assets and you have the privacy of your transactions.
Data privacy could be used in banking and finance through the payment of loan or mortgage, assuring the right process would be put into effect.
The Blockchain technology will create a revolution all over the world, but there are still doubts about its role in banking and finance. There will be no change in the world if global banks buy the start-up competitors they have. Banks would make people’s lives much easier applying this new technology and they would save a lot of time even for themselves.

The Distributed Ledger in Finance
The finance industry involves a complex and costly process for the transactions that are made by each of us. The higher the amount we need, the higher the amount we pay to banks. However, with the revolution of Blockchain entering the financial world, the costs of financial transactions can be drastically cut. Anybody would want to save money in performing these operations and the applications of the distributed ledger would do that.
Changes will not only be visible in banks, you could also expect the change in the finance industry due to the fast and efficient approach being given to financial processes and functions. These could make finance trading more effective, with fewer costs for the clients.

Benefits for Banks and Consumers
There is always the risk that banks will encounter potential issues in saving and handling all the expenses, and when the global banks are affected, their clients feel the consequences as well. With a faster and accurate way of dealing with the financial transactions, the cost of each process would involve less money for each party. Introducing Blockchain technology would save the client in facing difficult transactions that could affect the process of finance.
The cutting of the transaction cost is an effective way of levelling up a business on a large scale. Thereby, the costs are lower and each transaction is secured. Ripple (XRP) already agreed to Handle transactions for AMEX and Santander for UK-USA transfers. This coupled with Standard Charter as another client demonstrates that Blockchain technologies are more cost-effective and secure than the traditional banking systems for wire transfers.

Raising Money for Companies
Through Blockchain technology, a company can raise a vast amount of money in a different approach that is called distributed share offerings. In this way, there is a better possibility for companies to enlarge their earnings by making investments easier.
If the investment process is made in a fast and secure way, there is also a great chance of efficiently handling the assets. All the clients want a secure way of handling their money or having direct access to the assets they own.
Some banks already understood that they need to adapt their systems to the new trends and came forward with commercial applications for the technology. Keeping records of valuations is one of the benefits of keeping up with the new technologies, but is not the only advantage. Blockchain can also revolutionise banks’ core payment and trading systems, as it enables users to avoid the need for the middleman and it creates a public record of all the transactions. With bankers under pressure to cut costs, such efficiencies are attractive. Indeed, 50 of the world’s largest banks have started to look at Blockchain.
Applying Blockchain technology can revolutionise the whole banking and financing world by cutting costs and make the whole process easier. If the financial institutions keep up with these technological changes customers’ lives will be much easier and financial institutions will also survive this disruptive innovation.

Author: Mru Patel, Partner and COO of Flash Group, CEO of Sapian Capital


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