Unless you’ve been hiding under a rock, you know all about the decentralised ledger system called blockchain and it’s multi-faceted applications. It’s not new but it is seeing a resurgence in popularity and much wider adoption than ever before. From securing medical records in the healthcare industry to enabling smart contracts, blockchain technology benefits or is set to benefit many different business sectors.There’s been a lot of talk around how this technology could be the perfect complement to open banking offering advantages for all involved. Here are a few ways it might help this evolving area of Fintech:
Securing large data sets with blockchain democratises access to them, ensuring they are not just available to a few companies. This is also the idea behind open banking, but offers an additional layer of security. Current processes for identity verification are long winded and expensive. Using blockchain technology and open banking APIs removes the old-fashioned data silos and makes the processes easier for everyone involved.
Providing the public are educated on how blockchain works, they will be more comfortable giving access to their data and utilising the additional services on offer to them as a result of this secured data marketplace. It also gives them the flexibility to decide how much and which types of data the want to share.
Financial institutions will have less risk when it comes to regulation and compliance, which reduces the time spent on such vitally important processes. Recent reports estimate billions are spent globally on security and hacking concerns. Blockchain backed systems mean a decrease in this expenditure and less apprehension among consumers.
As mentioned in a previous article, consumer education is important in the mass adoption of open banking and the same goes for blockchain technology. However, there will be a point where financial institutions are no longer trying to lead the way, but where the next generation of technologically aware consumers start to make demands on them. This is the sweet point where tradition and innovation can come together to prepare the foundations of something remarkable that can evolve and morph as the market changes.