In our global competitive landscape, all firms are trying to get a hold of the next best thing. Since its popularity in 2016, Blockchain has been at the forefront of innovation. Blockchain has already started to affect many industries and will continue to do so in the coming 5 to 10 years. It is already changing the way we work in the fields of finance, legal, and healthcare.
Blockchain and Finance
Our current financial system has many problems because of how antique it is. Harvard Business Review says that it is a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. A huge issue in the financial world is how it is susceptible to economic crime every year. Blockchain helps firms by reducing fraud, KYC regulation, and cross-border payments.
In a report by PWC on the financial services sector, it was reported that 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services are affected by fraud every year. Most banks are currently utilizing a centralized database, but with Blockchain, there are several nodes that hackers must go through. The more nodes there are, the more secure Blockchain would be.
Know Your Customer (KYC) Regulation
In a 2017 report, Thomson Reuters stated that the costs and time taken to onboard a new client would rise. On average, financial institutions spend $48 million dollars on KYC and banks spend greater than that at $70 million dollars. These KYC regulations are important to reduce terrorism and money laundering. With the use of Blockchain, there would be an independent verification of one client by one organization and other organizations would be able to access this previous verification so that the KYC process wouldn’t have to be done all over again. With Blockchain, there would be a significant reduction of costs in compliance and an increase of efficiency in onboarding.
Global payments are expected to grow 5% per year every year according to McKinsey & Company and the total of $2 trillion dollars in revenue per year. If you were to send an international transaction today, it would take days if not weeks to be completed. Right now, the transfer of money has been expensive and slow because it would have to go through many intermediaries. Blockchain can speed up and simplify this process by cutting out the middlemen in this process and reduces costs of upwards of 2-3% of the total amount.
Blockchain and Legal
The legal services industry could benefit from Blockchain technology in several ways. The first way in which Blockchains are already being used is the creation of smart contracts, where commands are built into the contract and are executed when triggered. For example, when the terms of conditions are verified, the payouts are exchanged automatically. Blockchain also keeps track of land registry and deeds by creating a public blockchain ledger that is easily verified.
Blockchain and Healthcare
In Boston alone, there are 26 different electronic medical record systems being used today. The use of Blockchain would benefit the healthcare industry tremendously for both sides of the party. All information would be stored on a blockchain and whenever any caregiver could use it without worrying about incompatibility issues. This would not only result in a way to share medical records but also protect patient's data from hackers.