Erol User Highlights Impact of Blockchain on Financial Sector at Bosphorus Summit

The Blockchain wave has touched every industry. The innate nature of this technology has been useful in a wide range of areas. Finance has been no exception.

According to reports, 45% of financial intermediaries like stock exchanges of money transfers are undergoing tension of economic crime. The primary reasons for this inefficiency are the centralized and exclusionary nature of the finances. Experts believe that blockchain happens to be the sole panacea for these problems right now.

Recently, Erol User, the founder of blockchain consulting company Blockchainarmy, addressed the Bosphorus Panel on Blockchain. BlockchainArmy is of one of the world’s fastest-growing cryptocurrency firms.

The participants included Mark Mobius, the fund manager of emerging markets & head of Mobius Capital Partners LLP. The panelists were Coinarmy’s Peter Von Dam, Prof Aziz Akgul Chairman of Microfund Foundation, and Prof Massimo Buonomo UN Blockchain Expert.

Through the discussion, Erol User emphasized some of the most prominent use cases and impacts of blockchain technology in the Finance sector.

Here are some prominent use cases of blockchain that Erol stressed at the discussion:

• Fraud elimination

Blockchain technology is uniquely positioned to identify and alleviate the frauds of the financial markets. This has been recently gaining attention, giving rise in monetary crimes. Blockchain’s distributed ledger technology that is touted for its transparent operation can play a vital role in identifying and minimizing frauds. The decentralized database of blockchain will help banks dodge the cyber attacks that were earlier intended over their centralized database.

• KYC

Financial institutions spend a huge chunk of their money on doing the KYC of their customers and clients. It is also the most crucial step in the onboarding of a customer to prevent any money laundering or other criminal activities. Blockchain will aid this process of KYC cutting down expenses substantially.

• Insurance sector

The insurance sector is another place where blockchain can act as fuel. The process of contract bidding between 2 parties, which earlier involved numerous steps like premium payment, claim to file, etc. can be easily shortened with blockchain. It will revolutionize the insurance business as a whole through the replacement of legal contracts.

Advantages of Blockchain in Finance Industry

There isn’t one or two but many benefits of blockchain in the finance industry. Here are some of them:

• Affordable Banking

The blockchain, with its cost-cutting potential of traditional banking, will make it cheaper for one and all.

Even the banks agree to this statement. The distributed database will cut down costs on cross border payments. Both the groups can agree on a time period of validity for the transaction, without needing a mediating bureaucracy authority.

• Quick Settlements

Traditional Spot trading takes the time that can sometimes be tiring. Blockchain can help make spot trading an instantaneous process. It requires quick deliveries of the instrument that is traded, and in reality, it takes 2-3 days to finalize. With blockchain, the delay linked with associated parties like brokers can be eliminated.

• Improved capital optimization

Blockchain can remove the necessity of trust; it makes the transaction happen on a peer to peer level making it all transparent for the parties involved. By applying this technology in the financial industry, the fee of intermediaries like custodian banks can be eliminated.

• Improved performance of Contracts

Smart contracts improve the performance of the contractual terms. The smart contracts execute on their own on the basis of some pre-set metrics that need to be fulfilled. Blockchain can help firms tailor the implementation of these smart contracts inside the blockchain distributed ledger.

• More Financial solutions

The digital currencies and tokens have caused a significant rise in financial solutions. With one token loss worth $1, each of these tokens can be viewed as IOU. Following the first price plunge of around $0.30, it will trade at a value of $0.80, taking Bitfinex back to its previous operating value.

Conclusion

The Blockchain is definitely on a surge and is creating employment opportunities within all sectors. Its global spending in 2019 is valued at $2.1 billion. There is no way to prevent its impact on the financial sector. The upheaval is bound to happen, but for good.

The finances of a nation that involve transactions worth trillions of dollars by billions of people every day can be made seamless and theft-proof with blockchain. Hence it is only a matter of time that the technology takes over the reign doing away with all the transaction delays, data redundancies, or onerous paperwork.