The global banking and financial system plays a huge role in the life of the modern human being. It moves more than a trillion dollars around the world in a day, and more than a billion people are directly or indirectly served by it every day. It is the backbone of global trade finance and it enables enterprises, from start-ups to conglomerates, to run their businesses smoothly in any part of the world. The technology that makes this ecosystem tick has evolved in leaps and bounds in the last two decades, especially with the advent of the internet.
However, owing to compliance restrictions, reliance on legacy systems, and a conservative outlook on technology, most banking IT systems today are yet to adapt to advancements in technology and are unable to keep up with the nefarious means employed by malicious individuals. As a results close to half of banking customers have been expose to frauds and cyber crimes while dealing with payment gateways, stock exchanges, money transfer agencies, and so on.
Add to this the fact that the system has added layer after layer of middlemen and intermediaries owing to the limitations of conventional IT systems. This, in turn, has resulted in high fees and delays for the customers, not to mention a massive amount of paperwork arising from complex workflows. It also exposes the customer to the possibility of financial fraud and corruption. Lastly, the system in many cases is highly exclusive and denies basic access to financial products and services to a number of people around the world.
Generally, bankers have resisted sweeping changes to the current way the underlying technology works as they do not want to upset the apple cart and want to ensure that businesses that rely on them are able to continue working smoothly without any change in their user experience. However, the inefficiencies and faults in the system mean that such changes are the need of the hour. Disruptive innovation that can make the customer's experience even better is required to ensure that the system keeps chugging along and customers are able to operate their businesses without being slowed down or stopped by the technology on which their businesses are built. Enter blockchain.
Blockchain technology has numerous features and advantages that enable us to re think and re-engineer how modern financial services operate and serve the end customer. It enables us to design modern workflows minimizing middlemen, maximizing security, enabling transparency, and promoting high levels of interoperability between different players of the financial ecosystem.