Blockchain simplified:

Blockchain holds cryptographic proof of a transaction on a 32byte string that is replicated and stored on multiple nodes at the same time. The information once recorded cannot be changed or deleted; it’s secured and encrypted; it’s immutable. Like Internet & intranet, blockchain could be Public (permissioned) or private (permission less).

As the name suggests, the chain connects multiple network nodes and stores copies of the transaction on each of them instead of just one node connected to database. Multiple nodes creates tamper-proof and immutable records. Hence, a single node failure in the network will not affect the data or transaction stored on blockchain.

Blockchain in Banking:

Organizations are experimenting with new digital technologies that could help bring down overall cost for an organization and still improve the process and customer experience. All industry participants, mostly banks, IT giants, Fintechs are betting big on the cost advantages blockchain technology could bring. Banking industry is challenged by rising CIR (cost-to-income ratio). The Banking community is coming together to explore avenues to develop POC (proof of concept) in areas where it can either reduce cost, improve efficiency of the process or eliminate the dependence of a middleman in the process flow. The most famous consortium today is R3 with 42 member banks including famous names like Credit Suisse, State Street, BNY Mellon, UBS, Commonwealth Bank of Australia, BBVA, Barclays and Royal Bank of Scotland. They are working for a common cause in a collaborative lab environment to test and validate results from prototypes and proofs of concept using blockchain in different areas of Banking.

Financial services firms confront inefficiencies especially in correspondent banking payments, card transactions and international remittances due to existence of multiple intermediaries that render the transaction costly and non-traceable.

Blockchain technology can bring in transparency and speed by eliminating the need for a third party intermediary through a distributed ledger. One of the major problems it solves is of Record Keeping. This would not only speed up the overall processing but also bring cost efficiencies and make it highly secure from external attacks and hacking. Mphasis is addressing different levels of Record keeping problems for many organizations.

The other capability is in form of writing Smart Contracts. These are pre-agreed contractual condition that is stored and replicated on distributed database and when executed may result in success (meeting the pre-agreed conditions) or failure of the agreed terms & conditions. As a result, it can automatically trigger actions like payments, transfers etc.

Blockchain in other industries:

Multiple proof of concept are being developed to experiment with the feasibility and benefits the technology it brings in other verticals; be it government, public services, banks, manufacturing houses, logistics, etc. For instance UK government is exploring blockchain to manage distribution, monitoring and controlling of grants to students and collection of tax; a New York Energy project has developed Microgrids powered by blockchain technology that would allow consumers to sell solar energy units generated through solar panels installed on their rooftop to their neighbors; Russia’s National Settlement Depository is testing blockchain to deploy corporate e-proxy voting system; banks are experimenting with different functions in areas of loan processing, payments, trading & settlement etc. Other unique areas being explored are in Supply Chain Management, high-value asset tracking, protecting intellectual property rights in artistic property, digital records, receiving royalties for their part of work in music industry etc.

With technology in its embryonic stage and billions of dollars flowing in everyday to fund blockchain efforts, a lot more revolutionizing developments are yet to be witnessed