Blockchain & Finance
Blockchain enables opener and more secure networks, shared working models, more efficient processes, lower costs, and new products & services in banking and finance. It allows digital securities to be issued faster, at lower costs, and with more customization solutions.
In the past five years, the technology has matured for enterprise use demonstrating the following advantages:
- High-Performance: The networks are designed to support hundreds, sometimes even thousands of transactions per second.
- Security: Due to the decentralized consensus architecture, the single point of failure is eliminated.
- Programmability: It supports the producing and executing of smart contracts— tamper-proof, software. This software allows the automation of business logic – creating increased trust and efficiency.
- Transparency: It uses mutualized rules, protocols, and shared processes, working as a single source of truth for network users.
- Trust: Its open and fixed ledger makes it easy for different organizations in a network to collaborate, control data, and reach agreements.
- Privacy: It provides tools for data privacy across each layer of the network, enabling selective sharing of data in networks. This functionality improves transparency, trust, and efficiency while maintaining confidentiality and privacy.
Ethereum specifically has already shown disruptive improvements, creating cost reductions (10x) compared to current technologies. Financial institutions acknowledge that DLT (Distributed Ledger Technology) will bring savings for banks and other financial institutions over the coming decade.
Blockchain & Compliance
Compliance has become increasingly important in the finance industry. It is required to ensure that financial institutions recognize the relevant rules & laws for their business activities. It is an enormous challenge for institutions to keep up with the speed and complexity of regulatory change. This especially relevant when institutions operate internationally and therefore are exposed to several jurisdictions with different rules & laws.
Blockchain offers these advantages:
- Unique supervision and compliance tools
- Processes that automate (data) verification and reporting, facilitate regulatory oversight and eliminate errors linked with manual auditing. And this all, in real-time.
Digitization of Financial Instruments
Digital assets, smart contracts, and programmable money strengthen the advantages of blockchain-tech. It does this by facilitating new levels of connectivity and adjustability, between products, services, assets, and holdings.
These digitized instruments will redefine the processes of financial markets and create a new standard.
Blockchain offers the following advantages for digital financial instruments:
- Authenticity and scarcity: Digitization ensures integrity, and enables asset origin and full transaction history in a single shared source of truth.
- Programmable capabilities: Code that addresses compliance, data privacy, identity (KYC/AML) and features that manage stakeholder participation can be built into the asset itself.
- Streamlined processes: Higher automation increases overall operational efficiency. It enables real-time adjustment, audit, and reporting. It reduces processing periods, the potential for errors, and the number of steps required to achieve the same levels of confidence in current processes.
- Economic advantages: Automated and more efficient processes trigger reduced costs for; infrastructure, operation, and transactions.
- Market reactivity: Digital securities allow greater customization compared to the standardized securities. And therefore, it can be issued within shorter timeframes.
- Innovative products: Secure, scalable and fast asset transfers, and fractionalized ownership of real-world assets.
In short, these advantages result in more liable & transparent systems, more efficient business models, improved alignment between stakeholders and access to more investors.