Rise in Blockchain technology adoption: Conventional banks are increasingly adopting blockchain technology in their international payment systems. By far J.P. Morgan has been able to create the largest blockchain network for global payments solution. The bank has also announced that Royal Bank of Canada and Australia and New Zealand Banking Group Ltd. will join its network. This is poised to reflect increasing volume of payments through that platform.
J.P. Morgan has also created the Interbank Information Network (IIN) to facilitate the payments by reducing the amount of time needed for processing. This announcement by J.P. Morgan came after Polynesian payments system provider and IBM revealed their own international payment systems.
Other players are also entering this lucrative market with their own blockchain technologies. One of the prominent among them is The Bank of England that is eyeing to use blockchain technology to create more efficient and less costly payments, clearing and settlement network.
The global inflow and outflow of funds by the international banks is complex due to regulatory controls. However, thorough the use of artificial intelligence, machine learning and blockchain technologies, the investment and conventional banks are formulating innovative solutions to the increasingly entangled problems.
According to the report released by Accenture, the blockchain technology can shrink the cost of transferring funds of the eight out ten large investments banks by approximately 30%. This translates into the annual saving of about $8 to $12 billion dollars.
Payments, clearance and settlement methods adopted in the financial services industry are rife with inefficiencies. Thus, the blockchain technology provides the appropriate solution as it eliminates the need for reconciliation, confirmation and trade break analysis.
Some basics about blockchain technology.
Block chain is basically an electronic ledger with a distributed ledger technology. Whenever someone requests a payment, that request is sent to the P2P network of computers known as nodes. These networks of nodes validate the user and transaction by the use of algorithms. This verified transaction can involve cryptocurrency, contracts, records or other information. Thus a new block is added to the existing blockchain that is permanent and unalterable. After the previous step, the transaction is completed.