How Blockchain Technology is Lowering Costs for the Banking Industry and Improving the Customer Experience

If you have an interest in technology and a desire to get in on the next big thing, you may be eyeing Bitcoin, Ethereum and other cryptocurrencies. These alternative forms of payment promise security, anonymity and a path to the future, and many early investors have already staked their claim.

Since the world’s first cryptocurrency was first introduced, the market has had its ups and downs. After reaching a high of nearly $20,000 a coin, Bitcoin has seen its fortunes, and its selling price, fall dramatically, and only time will tell what happens in what is still a relatively new and largely unregulated marketplace.

Banking on Bitcoin

At the same time, the technology that underpins Bitcoin, Ethereum and other cryptocurrencies is only getting better. There have already been some stunning improvements in the security and stability of the blockchain, and the technology is already transforming industries and changing the way business is done.

Nowhere are those changes more apparent than in the world of banking. It only makes sense that blockchain technology would impact the world of banking – after all, the blockchain is basically an electronic ledger, one that indelibly records payments, sales and other transactions. But no matter what the reason, the world of banking has already been improved, resulting in lower costs for banks and better service for their customers.

Facilitating Faster Payments

The processing of payments has always been a big expense for the big banks, but blockchain technology is driving those costs down while speeding transactions. Payment speed is a major factor in banking, and as transactions get faster they should also get less expensive.

The use of blockchain may still be in its infancy, but its use in banking is somewhat more advanced. Many banks realized early on just how transformative blockchain technology could be, and financial institutions have invested heavily in bringing the blockchain into their operations.

Speeding Settlements

The settlement process is the backbone of the banking industry, and it is being transformed by the adoption of blockchain technology. Before the introduction of blockchain technology, the settlement process consisted of a tangled and complicated web, and many transactions remain mired in the morass.

For other banks, however, the tangled web of recording payments and securities transactions is much simpler. Thanks to the power of the blockchain, banks now have a way to indelibly and securely record all of their transactions on a single distributed ledger, resulting in faster clearing, lower costs and greater customer satisfaction.

Improving the Customer Experience with Mobile Apps

While most of them are not built on the blockchain platform, banks have been pushing hard into the world of mobile payments. This move toward mobile payment systems is clearly an attempt to improve the customer experience, but it is also a reaction to the growth of cryptocurrencies like Bitcoin and Ethereum.

Banks are increasingly worried that they will lose customers to newer and more anonymous forms of payment, and many have compromised by offering convenient mobile apps that allow individuals to pay one another and retail customers to pay for goods and services. Only time will tell if the presence of these mobile apps will stem the cryptocurrency tide, but they are already improving banking for retail customers and expanding options for business owners.

Blockchain technology may be relatively new, but it has already changed the world in surprising ways. Bitcoin, Ethereum and other cryptocurrencies would not be possible without the blockchain, but these alternative forms of payment and investment are just the face of the revolution. What is going on behind the scenes is far more interesting, and far more durable.

No matter what happens to Bitcoin and its fellow cryptocurrencies, the blockchain is here to stay. This emerging technology is already changing the way banks operate and the way individuals save and invest. These changes are only likely to accelerate in the future, ushering in a whole new world of banking.

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