Navigating Banking and Finance Towards a Greater Customer Experience with Blockchain

Jan 25, 2022

Banks are shifting from a product-centric to a customer-focused approach as a response to changing market dynamics. With rapidly evolving customer expectations, digital transformation in the Banking and Finance sector i.e Blockchain in Banking and Finance is important to reshape the industry’s future. Welcoming the digital future would ensure better banking experiences, better digital operations, innovation and build the right BFSI ecosystem.

Blockchain in banking and finance enables the industry to provide excellent customer service and hypercompetitive modelling techniques to deliver extreme operational efficiency. MSRvantage’s Blockchain Technology has proven to be of great application for developing unique banking solutions, resulting in massive business benefits.

Our remastered blockchain technology in finance supply model enables us to offer business relationships by delivering services such as information transfer, risk compliance with regulations, digital enablement, and innovation partnerships. It makes a big difference in banking services such as money transfer, trade finance, capital markets, asset/wealth management, custody, and settlements.

The Blockchain technology, with its ground-breaking solutions can foster next-generation transactions to adopt a transparent ecosystem in the banking and finance industry. Let’s dive into the blockchain use cases:

1. Raising Money

Today, securing funding through venture capital is a difficult task. The typical scenario is as follows: entrepreneurs build decks, meet with partners frequently, and engage in lengthy discussions about value and equity – all with the goal of acquiring a certain amount of funding. For people in the manufacturing and selling end, realization of funds is a major concern.

Solution:  The use of blockchain in banking and finance can speed up the process by raising capital in a variety of ways. Initial Exchange Offerings (IEOs), Equity Token Offerings (ETOs), and Security Token Offerings (STOs) are examples of these (STOs). Because of its legal protection, STO has become the most popular option.

The blockchain technology could aid in other financing service facilities such as keeping a record of the bill discounting and letter of credit, and ensuring the fulfilment of agreed upon conditions through the deployment of Blockchain Smart contracts in Banking.

2. Cost to Organization

Manual labor incurs additional operational costs. Despite the hype surrounding the automation of various processes in order to reduce costs, the finance industry is still grappling with the traditional transaction process.

Solution: Blockchain technology in finance is a distributed digital ledger that allows multiple parties to transfer and store sensitive information in a secure, permanent, and easily accessible location. It automates paper-intensive, costly, or logistically complex financial systems like remittances and cross-border transfers, shareholder management, ownership exchange, and securities trading. Blockchain in banking allows the industry to go paperless and minimize the organizational & infrastructural costs.

3. Delayed Transaction Time

The processing of international transactions and loans seems to consume an unappreciated amount of time thereby causing delays in important business affairs. It also shows delays in the handling of larger amounts of transactions. This slowdown is caused due to the involvement of multiple trusted financial intermediaries or the complete absence of an efficient data verification system.

Solution: Transfers of money can be completed in minutes or even seconds via a blockchain-based system instead of taking an average of 3-5 office days for each transaction. Use of blockchain technology in finance, makes settlements more user-friendly, saving time and money for the concerned parties. Blockchain in banking will not only make transactions faster and more secure, but will also provide better visibility of the transaction records, thereby gaining customer trust on the financial institution.

BFSI use case

4. Customer Loyalty and Reward Programs

In order to thrive in the competition and retain customers, the BFS industry has employed many customer-loyalty and reward programs. Although, the traditional way, it is extremely challenging to keep track of the reward claims, points, redemption expiries, etc. Since these programs involve collaborations with other parties, it is also complex to maintain business agreement contracts in addition to keeping an eye out for fraudulent claims.

Solution: Blockchain in banking is an immutable and transparent ledger that enables different parties in a corporate network to easily collaborate, process information, and form partnerships. Blockchain technology in finance provides market-leading discrete data privacy tools at every layer of the application. It enables preferential data sharing in business networks. It also increases visibility, trust, and effectiveness while maintaining privacy and confidentiality.

With Blockchain’s Reward and loyalty solutions, one can keep a track of claims, points, expiry dates, transactions, and much more. The reward transactions are so much smoother and faster that they eliminate the problem of delayed gratification.

5. Fraudulent Activities

Several suspicious claims involving property damage, car insurances, unemployment, etc have been observed to be made in order to claim insurance fund and/or avoid the repayment of a loan interest/principal. Fraudulent claims sum up to an annual total of about $80 billion globally. Fraudsters can even produce fake hospital bills, and fraudulent pathology lab reports. Sometimes the same claim is even made twice. A good dataset and carefully chosen models are the keys to successful detection.

Solution: Blockchain in banking and finance industries can ensure that only fully valid claims are paid out during the insurance claims process. If insurers store chronological claims data on the ledger, they will be more sensitive to suspicious behavior and fraud detection. The primary benefit of this method is that it reduces fraud by rejecting multiple claims for the same event because the channels are already aware that the claim has been paid. The industry’s task is to establish real-time claim evaluation and enhance fraud detection accuracy.

6. Challenges with Maintenance and Verification of Customer Details

Maintenance of customer details and KYC verification processes can be complicated and full of insecurities the traditional way. On one hand, banks are concerned about the authenticity of individual identities; on the other hand, individuals and corporates are concerned about their information and documents getting leaked from fraudulent sources. The information requested by financial institutions being highly confidential, security must be given utmost importance along with offering visibility and real-time accessibility of customer data.

 Solution: Customer’s databases are automatically updated with relevant information with blockchain. The tedious steps of updating data at each institute can be eliminated by simply registering once on the blockchain network. It avoids repeated verification for other services that use this decentralized network. The blockchain solution provider can assist banks in their technological adoption by enabling them to implement better and more cost-effective solutions that serve their client’s needs and save the additional charges in KYC procedures. Smart contract in banking offers a solution which includes compressive electronic signature service. It offers higher security as only someone with an ownership can edit the data.

7. Increased Compliance

An industry such as the banking and finance needs all the parties, intermediaries, customers, and itself to abide by the rules. There is a major trust factor in picture that comes with better visibility.

Solution: To ensure that the manpower follows company policies and also other intermediaries and parties comply by the agreed upon clauses, Blockchain Technology proves to be of help via its Smart Contract solution.

The Banks and Financial institutions too need to follow the rules and regulations set by the governing bodies. Blockchain stores all transaction and business data that would be necessary to ensure the same. Hence as an institution, Banks can be sure of keeping a clean slate.

MSRvanatge’s blockchain-based solutions for the Banking and Financial Services (BFS) industry will add enormous value to your organization via innovative engagement models, transformative approaches, delivery excellence, and reliable & consistent ecosystem.

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