Blockchain for Financial Market

Much is being talked about the Blockchain technology that is being majorly implemented by many companies across various industries. Will it be a boon or considered as disruptive technology?

Blockchain Technology

Blockchain is basically a source of recording information or transactions that can be distributed across a network of computers. It is similar to a database but differs in the way it stores information. A database is a collection of information that is stored electronically on a computer system and large databases are transferred to servers for storage and backup. Whereas, Blockchain stores data in blocks that hold information and are chained together. As new data is recorded it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block. Blocks have certain storage capacities and when filled they are chained onto the previous block, forming a chain of data known as “blockchain.” Each block contains a record of when it was created or edited, which makes it very useful for maintaining a detailed system of record. Blockchain is a distributed Database, each user on the blockchain has access to the entire database and its complete history along with date of formation and edits. It is a transparent and reliable source of information as all transactions are visible to everyone having access to the system. There is no central source of data and no individual or corporation has control over the blockchain.

Security and Reliability

Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it cannot be erased. Each blockchain record contains a unique cryptographic hash that is used to track that block, as well as others in the same chain, which means the data cannot be modified, making it secure for record keeping and auditing purposes. With blockchain, data is stored in transparent and shared databases, where they are protected from hacking, deletion, tampering, and revision.

When should Blockchain be used

Blockchain is still in its nascent stage and a little complicated to use. Blockchain eliminates huge amounts of physical recordkeeping and documentation as it has a huge volume of storage. With higher user privacy and security to lower cost and errors, blockchain technology is being used as applications across many industries such as Banking and Finance, Healthcare, Government, Oil and gas, etc.

It can be used for:

Secured digital sharing of data:
With a smart contract, automated payments can be released when parties in a transaction agree.

Remove intermediary to make it cost effective:
The verification and authentication process can be eliminated by automation making it independent of any intermediary involvement which helps to save cost and time.

Confidential information:
Theft of data and outside interference to hack or change the data is minimal, making it useful in places of sensitive and personal information such as banks and government activities.

Transactions with multiple partners.
When volumes are large and more complicated, blockchain can reduce bottlenecks and make sharing of information easy.

Large volumes of data to be updated regularly:
When information flow is frequent and past records need to be maintained, blockchain is a better, safer way to record data. It provides a historical trail of data as well as up-to-date records.

How Blockchain has changed Banking and Financial Markets :

Blockchain technology provides a way for two or more parties to work together without the use of a middleman or even banks. It allows setting up “smart contracts,” which are self executing contracts that can automate manual processes from authentication to claims processing.

Blockchain technology can replace many of the services that banks provide such as:

1. Payments:
With a decentralized ledger for payments blockchain technology can facilitate faster payments at lower fees than banks.

2. Clearance and Settlement Systems:
Distributed ledgers can reduce operational costs and keep track of real-time transactions.

3. Fundraising:
New platforms of financing are used to access capital from traditional capital raising services and firms.

4. Securities:
It can offer more efficient and low cost dealings by removing middlemen and paperwork.

5. Loans and Credit:
It can make borrowing money more secure and provide lower interest rates.

6. Trade Finance:
By replacing the paperwork and lengthy process it can create more transparency, security and trust among trade parties.

7. Customer KYC:
By storing customer information on decentralized blocks, blockchain technology can make it easier and safer to share information.

Bluecell Technology Advancement

Bluecell intelligence has ensured that its initiative for Digital transformation should be coupled with the latest technology available in the market as it has a future looking perspective. Its collaboration with many establishments and participants, like Govt Bodies, Auditors, Law firms, Trade Insurance Providers, Accounting Software Providers, etc. will ensure seamless processing through the lending ecosystem. Loan origination, authentication and approvals can be done faster within the platform.

Bluecell provides SME loans and Working Capital loans to borrowers through its lending platform. It has taken the initiative to provide Green Financing as its mission for a sustainable growth and future. It has recently collaborated with a Fintech company “Stacs” which will provide Blockchain enabled Green loans to SMEs and MSMEs. The partnership largely focuses on supporting effective green and sustainability-linked loans, among other Environmental, Social, and Governance (ESG) financing formats. Bluecell will connect its live end-to-end loans matching engine integrated with MyInfo, to STACS’ sustainability-enabling technology infrastructure, GreenSTACS, powered by blockchain technology. Bluecell strives to provide a tech enabled lending platform for its eco friendly partners and borrowers.

With the implementation of Blockchain technology, it will assure all parties of the authenticity of information in various parts of the lending process. This will add confidence in the process and reduce the cost of doing business. Lenders spend a significant amount of labour and cost to verify the authenticity and this will be a thing of the past with Bluecell.

The blockchain technology will also be used for Identity Verification & Know Your Customer (KYC). Smart identity provides automated identification and verification of customers which includes people and organization during sign up or for real time transaction. Bluecell will be able to digitize traditional identity documents such as driving licenses, passport, and identity cards into a single and versatile digital record. Singapore Govt Tech has launched MyInfo which is a one stop source for government verified personal information to identify the borrowers. Bluecell has tied up with them so that it will provide the authentication and instant retrieval of required information.

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