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Blockchain and Banking
globalization. From the World Bank’s estimate (2020), global merchandise exports
have contributed into 38% global GDP in 1980 to 38.8%, 51% in 1990, and 60.3% in
2010. From 2014 onwards, product movements, services, finance, citizens and cross-
border data have increased global GDP by approximately 10%, including significant
contributions from developed and emerging economies. As shown by the University
of Pennsylvania (2018), the global economy’s new trends are developing and emerg
ing economies, such as India and Africa (Kenya, East Africa), where they are dis
covering more and more blockchain applications. Kshetri and Voas (2018) assess that
blockchain can help a large proportion of the population in developed countries, so
there is a need to concentrate more on critical issues in driving blockchain growth.
Organizations worldwide are evolving and understanding the potential role of block
chain to help implement these advantages in today’s lives.
12.3 BLOCKCHAIN TECHNOLOGY AND ITS
POTENTIAL IN THE BANKING SYSTEM
Many recent studies indicate that, not only in developed countries but also in emerg
ing and developing countries, there are many advantages of blockchain in the bank
ing industry. According to a survey by Accenture (2017), blockchain plays a crucial
role in the growth of both banks and financial firms. Banks worldwide could save 20
billion dollars by 2022 by implementing a banking system that facilitates faster pay
ments and transfers and more accurate transactions using distributed ledger-based
customer identification systems. With only a straightforward step, blockchain will
enable users to validate their identity, and this information is stored in the system.
Blockchain is taking advantage of distributed ledger technology, according to
Belinky et al. (2015), because it offers many benefits. Some of the advantages that
blockchain technology brings to the banking industry are seen in Figure 12.3, with
six key advantages, including irrevocable banking transactions, prompt payments,
easy payments and transfers in the banking sector, as well as low-risk transactions.
Also, transactions are often low cost, allowing the financial system and clients to save
Integrate many
information in
transactions
Low cost
High accurate
Assigned by code,
high security
check
Quick speed of
transactions
Effective
monitoring and
inspection system
FIGURE 12.3 Benefits of using blockchain in transactions in the banking system. (From
Belinky, M., et al., The fintech 2.0 paper: Rebooting financial services, 2015, retrieved from
http://santanderinnoventures.com/wp-content/uploads/2015/06/The-Fintech-2-0-Paper.pdf;
Kshetri, N., and Voas, J., IEEE, 20, 11, 2018.)