Are blockchain technologies a panacea for banks?

Fast Blockchains as a Core of New Banking Technologies.  

It is no secret to anyone that the main banking systems around the world are eyeballing blockchain technologies as a potential panacea for many issues that have been plaguing the industry. There are dozens of applications for blockchain, and banking has always seemed to be one of the most promising directions for the technology’s use. And Credits, a blockchain based platform with high TPS speeds, low transaction costs, and an open API bypasses all the current technological limitations that make it challenging to use blockchain in the modern banking sector.

 

According to a study conducted by the consulting company Accenture which specializes in strategic planning, over half of all top managers admit that blockchain is going to play a key role in the success of financial companies in the near future. Accenture analysts have found that the world banking sector will save up to $20 billion by 2022 through the implementing blockchain technologies. The Credit Data Processing Bureau, which is subordinate to the Polish Bank Association, records the credit histories of about 150 million Europeans. The British fintech company Billon Group, which received EUR 1 million of investments from the EU last year, created a unique blockchain-based solution for the bureau to process customer data.

 

According to KPMG, in 2016, venture capital funding to global fintech companies reached a record $13.6 billion while overall investment in fintech companies totaled $24.7 billion.

 

The largest Spanish banking group, also one of the leaders in the UK, Grupo Santander is a pioneer in the implementation of blockchain technology in the banking industry. Santander, controlled by Banco Group, has implemented a fully functioning One Pay FX payment system running on the blockchain. The primary goal of the system is to optimize payments between Europe and South America with the use of distributed ledgers. The bank Goldman Sachs actively supports and studies distributed registry technology, and has already invested in the Circle cryptocurrency project. Bloomberg has reported that the bank intends to become the leader in the use of cryptocurrency among its Wall Street competitors, through the creation of its own cryptocurrency unit which will deal exclusively with digital currency trading operations.

 

 

The immense number of transactions made every second by VISA and MasterCard is no longer capable of ensuring the full scope of convenience and services that banking organizations have gotten used to. Therefore, they are looking for more convenient solutions that would be capable of providing both high bandwidth and throughput with scalability and high speeds. It is here that Credits can offer scalability, high transaction speeds with hundreds of thousands per second, BFT and DPOS instead of POW, asynchrony in the formation of blocks and the distribution of the previous block on network nodes.

 

According to a survey by The International Securities Association, 55% of banking companies polled are monitoring, researching, or developing solutions on top of blockchain for their payment services. The promise of blockchain as banking technology can be of benefit to the huge industry as it can eliminate the need to rely on intermediaries to approve transactions between consumers, as blockchain technology could facilitate faster payments at lower fees than banks. Clearance and Settlement Systems can use blockchain to reduce operational costs and bring users closer to real-time transactions between financial institutions. Commissions on blockchain-based systems are meager when compared to traditional banking fees and offer competitive exchange mechanisms with various fiat and crypto pairs that virtually no traditional banks on the market are allowed to conduct operations with.

 

By providing blockchain companies with immediate access to liquidity, open crowdfunding schemes, the blockchain technology is creating a new cryptoeconomic model of funding that provides access to capital from traditional financial services without the need to risk applying to banks, which can simply refuse loans after conducting stringent background checks, oftentimes turning blind, bureaucratic eyes at promising ideas. The idea of tokenizing traditional securities such as stocks, bonds, and alternative assets is inherent to blockchain as a new, open source structure of capital markets. Last but not least, by removing the need for gatekeepers in the loan and credit industry, such as banks, blockchain can make it more secure to borrow money and provide lower interest rates to the millions of unbanked around the world.