Imagine you want to transfer ₹ 10,000 to your friend in another country. It would take 3-5 days, with a fee as high as ₹ 500 earlier. Now, blockchain can enable the same transaction in a few minutes with a fee as low as ₹ 50.
For example, Ripple, one of Silicon Valley’s top private companies, aims to capture a share of the $2 trillion cross-border payments market, using its cryptocurrency, XRP, as part of its strategy.
Blockchain allows money transfers to become faster, cheaper, and safer for all users.
What is blockchain?
The blockchain is such a digital, secure notebook, recording and storing each transaction across many computers so that it becomes impossible to change. As such, it is a magic notebook wherein once something is written, it cannot be erased—completely apt for banks that need safety and transparency.
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- Better Security
The biggest fear that banks have is security. Each year, banks lose billions of dollars due to fraud and cyberattacks. In 2022, the average cost of a cyber breach was $4.35 million, with global cybercrime costing $7 trillion. This figure is projected to increase to $10.5 trillion by 2025.
It is susceptible to attacks, but blockchain secures transactions that prevent fraudsters from changing records and keeping money safe.
- Speedier and Cheaper Transactions
Traditional banking requires multiple parties, slowing down transactions and increasing costs. Blockchain simplifies the process, speeding up transactions and reducing expenses, making banking faster and cheaper.
For instance, J.P. Morgan is planning for a future where key aspects of global capitalism, such as cross-border payments and corporate debt issuance, are moved to the blockchain for greater efficiency.
- Reduced Costs for Banks and Customers
Running a bank is expensive, with costs for paperwork, system maintenance, and transaction verification. However, blockchain helps banks save money by simplifying processes and reducing the need for multiple systems and staff.
According to Accenture, blockchain technology could help the world’s largest investment banks reduce infrastructure costs by $8 to $12 billion annually by 2025, improving efficiency and lowering expenses.
- Border payment becomes easy
Currently, it takes a lot of time with huge charges to send money to some other country, but the introduction of blockchain now facilitates this process.
Ripple, a FinTech company, uses blockchain to enable faster and cheaper cross-border money transfers, offering a significant improvement over the slow and costly methods used in the past.
- Rule and Transparency
Banks must follow rules for safety and fairness. Blockchain supports this by maintaining a public, transparent record of transactions, making it easier for regulators to verify transactions while protecting privacy.
For instance, with blockchain, the KYC process can be expedited as well as secured. Banks then verify identities quickly and hence are able to comply with regulations without wasting time and money.
Blockchain in Banking: Key Facts and Figures
Here is a table that shows some of the important facts about blockchain’s impact on banking:
| Area | Impact | Example/Statistics |
| Security | Blockchain makes transactions secure. | The financial industry loses $6 trillion in cybercrime annually. |
| Transaction Speed | Transactions are faster. | JPM Coin reduces transaction time to seconds. |
| Cost Reduction | Reduces operational costs | Banks could save $10 billion annually with blockchain. |
| Cross-Border Payments | Facilitates cheap and quick payments | Ripple cuts cross-border payment fees by 60%. |
| Regulatory Compliance | Simplifies KYC processes and audits | Real-time transaction monitoring for regulators |
Conclusion
Blockchain is changing the world in banking, making transactions much safer, faster, and cheaper. A good example is sending money all over the world in just seconds with very low fees.
FinTech companies like Ripple use blockchain to improve global money transfers. Blockchain might save banks billions in the future and make services to customers better. Like mobile phones, today’s life cannot be imagined without them, and just as blockchain is becoming important for banking, it makes transferring money and saving faster, safer, and more efficient.
