Adoption of Blockchain Technology in Banking sector

India has entered into the second wave of COVID19. The number of cases are rising day by day. It is not only affecting our social and personal life but gradually impacting the whole back bone of Indian economy. None of the sectors has remained untouched of its impact and have been impacted badly, especially the financial sector.

Though Indian government is promoting digital India mission to provide a platform for on-line money transfer but few activities of recent past example, demonetization, where the hidden agenda of demonetization was to vanish all of the black money and to provide facilities / convenience towards adaptation of digital on-line money transfer tools like BHIM app , phone pay and google pay etc., have unknowingly familiarized all of us with the on-line money transfer methods which is need of the hour in this COVID time, when everything is working on remote mode. Today, most of us experience the power of digital innovation in our daily lives for transferring money be it for purchase of daily needs articles, groceries, medicines, fashion materials or transferring of money electronically from one account to the others and are not afraid of on-line transactions any more.

This huge dependence on on-line money transfer whether it is through any apps or netbanking has pushed the banking sector to become one of the most customer-friendly sector in terms of transactions keeping in mind the cybersecurity, to take various decisions using AI by observing the customer’s pattern on the basis of day to day transactions. Further, it is important for them to sustain these developments and keep on innovating new technologies and processes to provide a secure and fearless environment to its customers.

Blockchain is one of the concepts where each transaction is treated as a unique block that is linked with other encrypted blocks to transfer from one location to another with secured and encrypted environment. The linkage of various blocks appears like virtual chain that is strongly connected and verified by the decentralized encrypted environment (i.e. many sources validating the data simultaneously). All this helps in enhancing the cybersecurity.

Few of the India’s leading banks have already recognized the importance of block chain like ICICI, HDFC and Mahindra Bank and have adapted blockchain technology for their loan system. This is an efficient system to verify and authenticate the transactions leveraging the distributed ledger mechanism to ensure transparency in credit disbursement and also remove communication hurdles among various banks. Not limited to this, the technology also helps the banks in reduced frauds, better due diligence of customer’s KYC documents with other organizations, simplifying and expediting the c learning processes and error free transactions. For benefit that the customers get is time saving through swift transactions by following simple steps in secured encrypted environment.

This blockchain technology, not only gives an opportunity to the banks and financial institutions to use latest technology in secured environment but also to reduce their operations cost by reducing manpower, transaction processing time, as well as paper work there by increasing profitability.

By

Prof. Pradeep Verma

Assistant Professor

Area Chair – IT & Business Analytics