Big Data has taken the business world by storm impacting every industry over the past years. Another trending technology is Blockchain that has the potential to transform the way the world approaches big data with better security and data quality. The question is how these two innovations are related to one another and what results can the collaboration provide to the future of the financial sector.
Big Data & Blockchain for Financial Services
Blockchain acts as a decentralized ledger where every digital transaction is verified over a network of computers without a central ledger so that the data cannot be forged. Talking about the digital world, lack of trust is there between two parties exchanging a value. To ensure the authenticity of the data that is sent & received, Blockchain Development Services are being used in the fin-tech industry for the instant risk-free transaction at low expenses.
Conventional financial transactions are often costly due to a high number of risks associated in the process. But with blockchain, the banking industry can achieve many benefits such as lower transaction processing time, cost savings and fraud detection. Analytics process, when combined with blockchain, adds a secured data layer, as the big data-based on Blockchain is secure (without forgery) and valuable (structured for perfect analysis). The banks can now identify risky fraudulent transactions on real time to prevent the fraud instead of analyzing records after fraud has occurred.
Here are some of the amazing ways that show how Blockchain is transforming the finance sector to attain satisfying customer experience.
Claims Processing in Insurance Firm
When we talk about the insurance sector, there are some challenges that lead to low customer satisfaction such as fraudulent claims, scattered data sources, manual process, policies for one user sitting in the silo, etc. One of the ideal use cases for insurance is to create policies as smart contracts on the blockchain, which provides transparency, traceability and complete control for each claim. This not only helps in automatic pay-outs but also improve risk modeling for the sector, break down the current silos and reduce fraudulent claims by taking origin & ownership of assets to be insured.
Settlements in Asset Management
Another use of blockchain technology is to simplify the trade processes within asset management using an automated trade lifecycle. This enables all the parties in the transaction to have access to the exact same data about a trade, saving room for error and significant inefficiencies. This will help in providing benefits like infrastructural cost savings, better data management & transparency, removing the need of both brokers and intermediaries together. Manual trade processes that are often slow, cumbersome & risk-prone can be simplified and streamlined using blockchain technology.
International Payments Sector
One of the main issues we faced during international money transfer is that it takes lots of time, as global payments sector is huge, slow, costly and not traceable completely making it more error-prone, leading to money-laundering. This is where such payments need collaboration with blockchain. Santander is one of the first banks that implemented blockchain to their payments app, helping users send money globally 24 hours a day, clearing the next day. Though this step is quite new, many believe that blockchain will enable the banking industry to provide real-time international payments with reduced cost, lesser human error, and fraud cases.
Supply Chain & Trade Finance
Automated smart contracts and blockchains can transform how business processes of supply chain and trade finance works. Since supply chains are complex and distributed involving many parties across the globe, there is a lack of trust between one another leading towards the need for trusted third parties like banks or intermediaries. With Blockchain, smart contracts can be executed automatically to transfer any goods or money without the need for middlemen (such as Bank) and their fees. This will not only help in building a trusted network but also ensures authenticity & origin of products being supplied.
Most of the financial institutions are responsible for complying & reporting on several requirements for customer protection measures from their local regulator. The KYC (Know Your Customer) is a key requirement but the process can be very time-consuming as it lacks an automated customer identification system & team integration to carry out their work. However, Blockchain can ease the whole process by providing a digital single source of ID information for the uninterrupted exchange of documents between external agencies and banks. This helps in reducing resource, time, cost and maintain the data privacy that is legally essential.
As Blockchain implementation is still at its nascent stage, many other new technologies could emerge that can bring positive results to bitcoin & blockchain-oriented businesses. However, banks and other fin-tech industries are already making use of blockchain technology with Big Data Analytics Solutions to keep track of every transaction. The successful concoction of big data and blockchain awaits a world of immense possibilities by making real-time analytics achievable and solving problems of fraud detection and risk assessment in the financial services industry.