Bitcoin and other cryptocurrencies are on the path to building a successful parallel economy to the traditional government-backed and controlled economic system. It has evolved itself into a market of investors and merchants just like the conventional system. Actually, beyond the system are some use cases like DeFi. Despite their popularity, cryptocurrencies have faced resistance from governments all around the world, which are skeptical for the use of these currencies causing apprehension about the associated risks among the users. Though majorly avoided by governments, Wall Street banks have taken some steps towards adopting blockchain technology for its increased popularity among users, investors, corporations, and fintech competitors. Major players including JPMorgan, Citi Bank, and Goldman Sachs are exploring the technology behind cryptocurrencies like Bitcoin and Ethereum. Where Does Blockchain Fit in Banking In the banks’ controlled economy, centralized databases are used as bank ledgers which are susceptible to cyber-attacks, downtimes, and delays. On the other hand, blockchain provides transparency and enables real-time fraud analysis and prevention. The blockchain ledger can provide a historical record of all documents shared and compliance activities undertaken for each banking customer. The major drawback of slow and inefficient cross-border money transfer hamper the trust and safety in the system, majorly attributed due to the lack of transparency and consensus. This is because, with multiple parties involved in reconciliation, the task of identifying and addressing inconsistencies has been hampered by a lack of standardization, the use of fragmented communication methods like phone, email, and even fax, and the non-availability of a single version of the truth that both sides can rely on. Blockchain Solutions Adapted by the Banking Sector Lured by the promise of improving some of the sector’s oldest processes, several large banks are testing blockchain technology. Banks have so far mainly opted to take some of the principles behind blockchain, adapting the technology for different use cases to crypto. Some of the initial adaptations of blockchain by the banking sector are as follows: Liink According to JPMorgan, the adoption of blockchain in banking is only a few years away. It has rebranded its blockchain-based Interbank Information Network(IIN) developed in 2016 as Liink. It is an enterprise-level blockchain solution to address delays in cross-border payments. JPMorgan is focused on relieving pain points in the world of wholesale payments by using blockchain technology. It believes that by combining many users or companies on one blockchain, or ledger, transactions can be done in near real-time with certainty, which will produce billions of dollars in savings. Traditionally, cross-border payments rely on a complex global web of correspondent banks in which payments sometimes get rejected for errors in the account information or other problems. According to Takis Georgakopoulos, the bank’s global head of wholesale payments, another area is in processing paper checks, which relies on armies of people to handle mail at physical locations called lockboxes. That could be radically simplified with an exchange where the digital information associated with a check gets posted, skipping the mail altogether. He informed that using a version of the blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it’s possible we can save 75% of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days. JPMorgan has developed Liink which is a mutually accessible ledger by permissioned banks. This uses Onyx’s blockchain platform. Onyx is a new business unit in the leading bank dedicated to building next-generation payment capabilities which acts as an umbrella for its blockchain and digital currency initiatives. It is a platform for central banks and governments provisioning instant money transfers across borders, within minutes and seconds, by utilizing digital currencies on secure blockchains, transforming a global system that currently takes three to five days to complete transactions. Currently, it is joined by 25+ of the world’s top banks and 400+ leading financial institutions in 78 countries. There are various applications on Liink for resolving compliance inquiries to communicate directly with counterparty banks to resolve sanctions screening queries on payments, to check that the formatting matches the country and currency-specific information required to make the payment, confirming account information to accelerate transactions by pre-validating account information and for digitizing payments to reduce inefficiencies experienced in legacy bill payment systems. State Bank of India has recently joined Liink to increase the speed of customer transactions, including cross-border payments, and lower the costs. Project Ubin It is developed in collaboration with the Monetary Authority of Singapore and JP Morgan. It is joined by 40+ financial and non-financial firms, with 6 published projects. Project Ubin was created as practical experimentation to explore the use of blockchain and DLT for clearing and settlement of payments and securities. Partnering R3, a blockchain company, and a consortium of financial institutions … Continued
The post Adoption of Blockchain by Banking Sector appeared first on Cryptoknowmics-Crypto News and Media Platform.
from Live Crypto News – Cryptoknowmics-Crypto News and Media Platform
