Developing technology is shaping the banking sector as it affects every sector. Technology is effective in the development of new products and services in the banking sector, as well as in security. Since the security of personal data in banking is much more important than other fields, it has become inevitable to benefit from current technologies in this field. Blockchain technology is one of the parts of the financial industry, both in terms of security and in many different aspects. We researched the place and importance of Blockchain technology in the financial world for you.
What Does Blockchain Basically Mean?
Artificial intelligence supported mobile assistants, biometric authentication systems, voice and video banking, account opening without going to a digital/branch, cloud-based systems… The contributions of technology to the banking sector are innumerable. Blockchain, that is, blockchain networks, one of the most popular technologies of recent years, is one of the concrete areas where technology affects banking.
Although blockchain technology may seem complex, its basic concept is quite simple. Blockchain, which is essentially a type of database, defines the chain structure consisting of blocks. Blockchain, which ensures the safe storage and processing of valuable data, uses a distributed network structure while doing this. Each transaction is recorded on the network as a block structure, these block structures are linked chronologically to form a secure chain. Block structures can only be accessed by network members and cannot be changed by outside intervention. With all these features, Blockchain is an extremely secure structure.
Blockchain, which has been used for different purposes in many sectors over time and even pioneered the birth of cryptocurrencies, has also become a highly functional technology for the finance sector.
What is the Importance of Blockchain Technology for the Financial Industry?
Blockchain has been adopted by many international institutions in a short time, as it supports the more transparent, secure, fast and efficient operation of business processes in financial institutions. The advantages that arise as a result of the relationship between blockchain and finance can be listed as follows:
- The fact that all transactions in the blockchain network are permanently recorded and it is not possible to change the block structures increases security. In addition, the data stored with Blockchain is only available to network members.
- Transactions made by network users are recorded transparently and with high security. To change the data requires the addition of extra chains and confirmation from other blocks. All these features minimize security vulnerabilities in the financial sector.
- Blockchain completely replaces the complex document storage procedure that is of great importance to financial institutions. Thanks to transaction protocols called smart contracts that can transact with the blockchain database, time-consuming approval processes are minimized. In this way, the operational burden and costs of financial institutions are significantly reduced.
- Thanks to digital currencies using blockchain technology, it becomes possible to perform money transfer transactions more securely and quickly. Transaction costs are reduced.
