Combining shared databases and cryptography, blockchain technology allows multiple parties that may not know each other from different geographical locations to have simultaneous access to a constantly updated digital ledger that cannot be altered.
The blockchain is a powerful technology that enables Bitcoin, Litecoin, Dogecoin, and other virtual currencies to be open, anonymous, and secure. The blockchain essentially is a database about every Bitcoin transaction in detail. Usually known as a “public ledger,” the log contains metadata about when and how each transaction took place. The ledger is publicly accessible through APIs and torrent sites. To prevent tampering with current and also past transactions, the database is cryptographically secured.
Because of Cryptography can edit only the parts of the blockchain that they “own” - by possessing the private keys required to write to the file. It also keeps everyone’s copy of the distributed blockchain is kept in sync.
The blockchain could potentially save banks billions in cash by dramatically reducing processing costs. Banks are keen to take the opportunity to reduce transaction costs and the amount of paper that they process. Implementing blockchain would be a step to making banks increasingly profitable and valuable.
All major banks are trying out blockchain which could be used for money transfers, record keeping and other back-end functions. The blockchain application changes the paper-intensive international trade finance process to an electronic decentralized ledger that gives all the participating entities, including banks, the ability to access a single source of information. It also allows them to track all documentation and validate ownership of assets digitally, as an un-alterable ledger in real time.
Let’s look at how the financial and banking industry could benefit from blockchain.
Blockchain is being recognized as the new technology that would reduce fraud in the financial world where 45% of financial intermediaries like stock exchanges and money transfer services are prone to financial crimes routinely. Most banking systems in the world, built on a centralized database, are more vulnerable to cyberattack because once hackers attack the one system they get full access. This technology would get rid of some of the current crimes committed online today against our financial institutions.
Financial institutions spend anywhere from $60 million up to $500 million per year to keep up with Know your Customer (KYC) and customer due diligence regulations according to a Thomson Reuters Survey. These regulations are meant to help reduce money laundering and terrorism activities by having requirements for businesses to verify and identify their clients. Blockchain would allow an organization to access the verification details of a client by another organization, thus avoiding repetition of the KYC process. The reduction in administrative costs for compliance departments would be significant.
Blockchains facilitate smart contracts as they facilitate storage of any kind of digital information, including computer code that can be executed once two or more parties enter their keys. Contracts could be created and financial transactions executed when this code is programmed, according to the set criteria.
The messy web that records loans and securities costs investment banks billions of dollars to run. Today, this is managed through a myriad of messages and manual reconciliation One of the best-known examples of this restructuring is the Australian Securities Exchange, which aims to transfer a lot of its post-trade clearing and settlement on to a blockchain system
Trade finance is still mostly based on paper, such as bills of lading or letters of credit, being sent by fax or post around the world. Many think that blockchain is the obvious solution especially as numerous parties need access to the same information. This is a very important element of the supply chain, and blockchain can offer a vast amount of elements in this area. Mr. Ramachandran, head of innovation for commercial banking at HSBC, predicts that it will take five years to digitize the entire trade ecosystems, such as sugar or energy, but blockchain technology has the potential to be “genuinely game changing".
When a US company raises money via a syndicated loan it takes an average of 19 days for the bank to settle the transaction. When a loan changes hands between banks or a borrower repays a loan early, much of the communication is still done by fax. He however indicates that, finding a way for separate blockchains to connect to each other in a way that changes to a loan's ownership is quickly reflected across all systems, is the core challenge. However, like trade finance, blockchain technology will not solve all the inefficiencies in the syndicated loan market alone, he says.
Blockchain disruption could be highly transformative in the payments process. It would allow banks higher security with minimal lower costs to process payment between organizations and their clients and even between banks themselves. Blockchain would get rid of all the intermediaries in the payment processing system.
With blockchain-based technology, there would momentous changes on our trading platforms with the risk of operational errors and fraud highly reduced. NASDAQ and the Australian Securities Exchange are some of the entities looking at blockchain solutions to cut costs and improve efficiencies.
"Nelito has Good knowledge of industry. Good customer orientation. They were Flexible and Open to new ideas and suggestions."
"For a Bank of our size, this system suffices and is very cost effective. Almost all of the bank’s activities run on the one system. Nelito constitutes a partner more than a supplier and the relationship includes provision of the bank’s underlying technology as well as its Fincraft range of applications."
"The best mix of functionality and technological support and our vision of “Cash Less and Paper Less” work environment for Sonata has come true with our technological partner Nelito. I highly recommend FinCraft Core Microfinance platform and especially integrations with a number of third party services."
"Nelito has successfully deployed the Online Reporting and Management Information System (ORMIS), which has streamlined the reporting process and their analysis. Its team is responsive, provided satisfactory support and has sound expertise to deliver time sensitive & critical projects. Exemplary team work."
"We are happy to use FinCraft Data Archival & Retrieval solution from Nelito Systems; it has given huge ROI in terms of saving revenue by retiring legacy applications. We get all desired reports in a timely manner from the solution."
"Nelito is known for its exemplary services to the users at all times. Your team provides excellent service and they are pro-active in providing solutions."
"On the whole a professional and capable and competent team. Providing solutions adapted to clientele updated on technology front."
"Proactive & professionally supportive, technically skilled team."
"Fincraft CBS software & Doorstep Banking Solution helps our society’s functionality towards digitalization & paperless working. It reduces our manpower requirement and workload, also gives us fast reporting for our institution as and when required."
Exemplary relationship set by Nelito’s PCS team which helps project to grow vertically. We have always been very impressed with the quality of service we have received from Nelito. They are reliable efficient professional and above all truthful. This alone sets them out from much of their competition.
"E-district Manipur project was undertaken and successfully implemented by Nelito in a record time. The online services offered under this project has made a marked difference in the quality of life of the citizens and is taking the state towards a digital Manipur."
"On 20th of November 2016 our bank data was migrated to FinCraft and we have completed one year successfully in FinCraft. So we thank all the team members of both IFTAS and Nelito for your great co-operation in this success. We expect more & more co-operation in implementing new technologies in banking sector from your side in future."
"My bank is working with Nelito from the last about 9 Years and the services provided by the company may prolong our association."
"The Bank is associated with M/S Nelito since 2002. M/S Nelito Systems Ltd has been our CBS vendor since 2009. The Products, quality of service offered by them are excellent. They have a very good support team and are trained enough for handling any type of situation."
"We appreciate your local team who continuously supported & assisted our team to meet the goal."
"Knowledge and service provided to the bank is beyond expectation. And we would definitely engage and recommend solution to others."
"As Vendor strict adherence to process & procedures. Risk Mitigates in Place. Flexible to customer requirements."
"Bank has implemented CBS of Nelito Ltd in the year 2008-09 in phase manner. Also integrated RTGS/NEFT, CTS, MMS etc. which help us in smooth automation of banking operation."
"Experience during development of Rating Engine Module has been good in the context of commitment to meet timelines & lot of hard work has been put by Nelito's team."
"Everything was successfully implemented and tested. The implementation was professionally done in a very efficient and cooperative manner. Migration was very smooth."
"Nelito and its team has always been supportive and efficient in achieving the tasks set up by the Dept. Apps developed by the software engineers for the Public Health Dept. have proved to be excellent among the top competitors and have been acclaimed for its effective service delivery to the end user at the grass root level which is the foremost object of any Govt. organization. Many thanks for the sincere efforts."
"We appreciate Nelito team who were always on time and responsive to our needs and changing ideas. They worked efficiently from the project inception to its completion in a timely and professional manner. Their understanding of this space has been invaluable to the success and launch of 'PMAY CLSS' app."