Brands in the banking sector are always on the toes because of the stiff competition in this industry. Better interest rates, prompt service, wide coverage of branches in different cities, etc., are some of the expectation a customer has from a Bank. But the one thing which is above all is ‘trust’. The assurance that someone’s money is safe with the Bank, that there won’t be any alteration in the transaction details of the customer and that the money would be given back the customer on the terms and conditions initially communicated and mutually agreed.
Pain Areas of Banking Sector
Security Threats: Privacy is a concern in the Banking sector. Some of the ways in which violation of privacy can take place are:
- -sharing personal information with third parties or allowing them access for marketing purposes without approval from users,
- -stolen or lost banking number or card,
- -inadequate notification to an individual about what will be done with their personal data,
- -collection of more personal data than is necessary, refusing in providing financial records when requested by the client,
- -incorrect recording of personal information, and
- -loss of a client’s personal data due to improper security measures.
Banks are exposed to a number of cyber security attacks. Phishing, Cross site scripting, Vishing, Cyber Squatting, Bot networks, E-mail related crimes, Malware, SMS Spoofing, Denial of service attacks, Pharming, Insider threats are the emerging information security attacks on banks.
Third Party Authentication: Many of the Banks depend on a third party for collection of KYC documents and their authentication. There is risk involved in this process since banks rely on the non-digital process which is prone to alteration and tampering.
Delays: All the physical process involved lead to delays in account opening and loan disbursement.
The Blockchain is the new popular technology that promises to offer security, immutability, and swiftness to different process in a Bank. As it is based on distributed ledger technology, there is no single point of failure, and all the computers in the Blockchain are liable for the verification of each transaction. When a transaction happens, it is known by the whole network instantaneously, and the system records the details of the transaction in a ‘block’ of data. Subsequently, different blocks of data are formed, stacked on each other in an unalterable manner. Thus, if details of a particular transaction present in a blog need to be hacked, then the hacker needs to alter details of all the blocks in chronological order, which is almost impossible.
How Blockchain Application Solves Woes of Banking Sector
Cost Savings & Fraud Prevention: Blockchain Technology is built on the concept of sharing information across parties.This saves on reconciliation cost between banks and prevents losses because of documentary frauds.
Reliability: In a Blockchain application network, data is not stored in a central location, but is distributed and is available on all the computers in the network. So there is no single point of failure. Thus, in the case of natural calamities like flood, earthquake, etc., the Blockchain application will remain functional.
Swift Decision Making: Blockchain Technology helps in reducing the processing time of transactions by reducing the time required for making a decision.In a Blockchain network, whenever a transaction happens, it is known by the network immediately.Hence all the stakeholders in the system can swiftly take the decision, to either authenticate the transaction or not.
Provenance: The unalterable nature of a Blockchain application In the area of payments can provide provenance and audibility of the messages sent to each party at every step of a transaction.