Blockchain technology is all the rage in recent years. Simply put, this technology is an online ledger that is completely secure and transparent. It allows individuals and institutions to exchange information with complete veracity, and for this reason, many banks are taking a look at how they can utilize the technology to serve clients and lower costs.
“Blockchain” and “Bitcoin” are often used interchangeably in conversation, but in fact Bitcoin is just one application that can run on blockchain. The most popular non-coin applications used with blockchain technology are contracts that need to be guaranteed for authenticity. These include account opening documents, mortgage applications, purchases of financial products like Money Orders, Certificates of Deposit etc. Using the applications on the blockchain platform, banks can guarantee 100% that the documents are authentic and not fraudulent. They know that the applicant has also authorized all of the information.
Applying this technology has two important effects. First, it radically reduces the number of staff required to audit and authenticate documents because of the elimination of fraud. That means the bank can ultimately reduce costs and provide better rates for customers.
Secondly, it improves the efficiency of the institution as the documents are all held in an accessible online ledger that is completely secure. Bank officers can collect all of the information in one, easy location. They can make quick decisions based on the data in the documents and begin to process the product desired by the customer.
Blockchain technology is still arguably at the “experimentation” stage, but its fans believe it will eventually touch every financial institution if it continues growing at its current rate.
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