Nowadays the banking industry is being taunted by a lot of ‘disruptive’ change and
competition. Financial institutions are being squeezed by the growing costs and continuous
margin pressure. Agile Finance Technologies are driving an imperative for banks to become
more agile and open in order to offer more compelling services to clients.
The Banking Industry
Before the entry of digitalisation and Blockchain every action in the traditional banking
industry had to be done manually. Resulting in poor customer experience, complex clearing
processes, large amount of manual inspection, leaking personal information and high costs.
The involvement of a third party in a transaction is the main problem that has been
solved by the creation of Blockchain due to one central shared database. In the past this was
not possible because every transaction required communication between two databases with
an authorizing controlling layer (the third party).
Blockchain Technology
The Blockchain is a distributed ledger network. Every change will be synchronized in real
time, which results in a transparent and secure network. Every ledger can be seen as a block
and all blocks are linked together cryptographically. Because the Blockchain is a
decentralized network, it is impossible for anyone or group of people to gain control of it. The
Blockchain is steering a new era.
In 2008 when an anonymous person or group of people under the name ‘Satoshi
Nakamoto’ published a paper which posited an electronic peer-to-peer cash system,
Blockchain was born.The Blockchain was originally developed to support Bitcoin, but now it
is used for more than 900 cryptocurrencies, which resulted in a Long Tail Effect. It is just now
that the Blockchain technology has reached the required level of maturity for a widespread
and mainstream use.
Disruption
The elimination of the involvement of a third party in transactions by Blockchain, is disrupting
the banking industry, as it’s secure, cuts cost, reduces delays and it is very efficient.
The decentralisation and permissionless of Blockchain, can lead to more major
disruptions in the financial sector, especially in payment clearing. According to IBM 66% of
banks will have commercial Blockchain at scale within four years.
Future Forecast
Looking at the future the assumption is that there are a lot of opportunities. For example, the
implementation of Point-to-point payment, sharing credit data and smart contracts. The
financial industry is highly sensitive for technological changes. To keep up with these
changes, banks have to invest more in research on Blockchain. To improve the customer
experience in the banking industry, banks would have to improve their payment systems and
reduce the information handling between the different parties. That is why Blockchain will
become the underlying technology for the financial sector and banking industry in the near
future.
Video Assignment Blockchain in the Banking Industry
Team 10: A. Man, B. I. Bergevoet, J. Getrouw, T. Zandstra
References:
• Blockchain 3.0 (12): Restructuring existing credit information system by Blockchain credit
[EB/OL])
• https://www.cbinsights.com/research/industries-disrupted-Blockchain/
• https://www.theclearinghouse.org/research/2016/2016-q4-bankingperspectives/
Blockchain-cross-border-payments
• https://www.ibm.com/blogs/insights-on-business/banking/banks-rely-hybrid-cloud/
• https://www.forbes.com/sites/bernardmarr/2017/08/10/practical-examples-of-how-
Blockchains-are-used-in-banking-and-the-financial-services-sector/#b3cd7bf1a116
• https://fd.nl/beurs/1218524/zijn-we-getuige-van-een-knappende-bitcoin-zeepbel
• https://www.youtube.com/watch?v=G3psxs3gyf8
• http://www.ameda.org.eg/files/gs-16-1-distributed-ledgertechnology.
pdf
• https://link.springer.com/content/pdf/10.1007%2Fs12599-017-0467-3.pdf
• https://link.springer.com/article/10.1186/s40854-016-0034-9
• McKinsey (Report by McKinsey:Blockchain—Disrupting the Rules of the Banking
Industry,2016-05.)
