The global financial sector is currently in a structural transformation process driven by innovative technologies. Blockchain is currently leading the troop of disruptive technologies and believed to be a decisive factor that will change the way the financial sector is working today. Financial firms are firmly progressing towards blockchain technology as a more secure and reliable system for record transactions. Most of the financial companies consider blockchain as the key to their success and will be a mainstream technology sooner than we expect.
The potential blockchain creates for financial companies is endless. It can be implemented in various banking operations including third-party transactions, trade finance, cross-border payments, record keeping, banking back-end operations, regulatory compliance & audit, open banking, etc.
But how do financial firms identify the right use cases for their business needs? How to start the journey of embracing blockchain to their business model? Salesforce has recently launched its Blockchain initiatives after engaging with various customers in order to understand their pain points and identify opportunities for blockchain to improve their business models.
Now let’s discuss what makes blockchain disruptive for the financial sector.
Before we explain various blockchain use cases in the financial sector, let us tell you why blockchain makes a lot of sense for this particular industry. Blockchain’s three integral features Decentralization, Distributed and Immutability are the primary reasons why this disruptive technology will significantly transform the financial sector.
Top Blockchain Financial Industry use cases
KYC (Know Your Customer)
Know Your Customer is still majorly a manual process that requires a long time and as per a Thomson Reuters survey, financial institutions spend around $60 million to $500 million annually for KYC. As this is a manual process and involves multiple reviewers to validate and update customer information, there are high chances of error involved. Currently, financial firms need to upload the KYC details of each and every customer into a central registry. Isn’t it a highly complex process where a lot of time, money and manpower involved? There comes blockchain. By putting the entire KYC process on the blockchain and including all the participants in the nodes will make the process highly efficient, fast, secure and cost-effective. This will take the overall customer experience to a whole new level.
Financial Regulatory Compliance & Audit Reporting
The financial industry is one of the most regulated industries where they need to keep records for years for audit reporting. It is challenging as well as highly expensive. Financial companies can use blockchain to address regulatory needs. Due to blockchain’s immutable feature, the risk involved in addressing regulatory needs can be minimized. Once the data is stored into the chain, it can never be modified or deleted. Regulators can trust the data and the overall process can be highly simplified without the need to compile reports manually. Regulators can also review the original record transactions, not various copies.
This is one of the biggest blockchain use cases for the financial industry. Sending money to another country has always been expensive and complex. There are multiple intermediaries involved along with hefty processing fees. The process is also highly time-consuming as your bank transmits a message to a bank that is intermediary in another country, who then sends a verification message to the receiving bank, after confirmation, the money got transferred. With the help of blockchain technology, cross-border transactions can be done with a click with the help of a smartphone. With network verified transactions, blockchain can eliminate intermediaries enabling money transfer directly between the sender and receiver.
Challenges in implementing Blockchain
Implementing blockchain is a challenge for many financial firms. The biggest challenges are getting the right resource and adoption. It’s difficult to get the right set of blockchain professionals who can understand your pain points and build blockchain solutions. Apart from this, the other biggest challenge is adoption. It is difficult for financial specialists to adopt the technology which is completely new and the industry is one of those which is still highly driven by manual processes. Blockchain implementation also has some other challenges such as awareness and understanding, high cost, security, lack of a technological partner, etc.
Salesforce powered Blockchain
Salesforce recently introduced the industry’s first declarative blockchain built into CRM. Salesforce Blockchain allows developers to effortlessly build blockchain applications with clicks, not code. As it is highly integrated into Sales, Service, and Marketing Cloud, Salesforce users can adopt blockchain technology quickly. It provides the trust financial sector need to share data with each other and with customers. Get in touch with us to know more about blockchain & how it can transform your business.