The Financial Services industry is fundamentally about facilitating the trusted exchange of value between multiple, untrusting parties. Brokering that trust is an enormous responsibility and carries significant risk, which is why the industry has become increasingly reliant on costly intermediaries, manual processes, and error-prone reconciliations.
Over the past 2-3 years, blockchain has emerged as a viable technology for addressing multi-party business processes and value exchange without complex shared data schemes and third-party intermediaries. The shared record enables organizations to collaborate more efficiently – and because every member of the network holds a record of every transaction, it is nearly impossible to manipulate data undetected.
Let’s take a look at five functions of Financial Services that are already being transformed by blockchain technology.
- Trade Finance: Simplified integration between banks, corporations, and the ecosystem of trade service providers of KYC and credit data helping to mange the financial risk of international trade for importing and exporting parties
- Commercial Insurance: Reduced frictional costs and administrative burden, faster payment reconciliation, indisputable audit trails, and lower risk of fraud for high-value insurance scenarios, such as reinsurance, or maritime and aviation insurance
- Regulatory Compliance: Secure recording, storage, and review of customer and transaction data throughout the lifecycle, resulting in a significant reduction in back office regulatory reporting costs maintaining and documenting compliance with government regulations.
- Claims Processing: Automatic claims built on blockchain smart contracts enable a single version of the truth for claim data, increase trust between parties, and create a more efficient claims process.
- B2B Contract Processing: Banks can use blockchain technology to build secure Digital Lockers that store sensitive documents. By creating and maintaining contracts in a Digital Locker, banks can enable all parties to easily and securely collaborate on documents.