HYDERABAD: Blockchain, the technology behind Bitcoin crypto currency, can fetch multiple benefits, from cost savings, improved efficiency to transparency, for the banking and financial sector in the country.
“The time is ripe for its adoption in India,” said a White Paper brought out by the Institute for Development and Research in Banking Technology (IDRBT) on applications of the technology to banking and financial sector.
One of the most talked about technologies in the financial sector, block chain technology (BCT) has the potential to address certain limitations of the current processes in the sector. It can achieve this by “modernising, streamlining and simplifying the traditional siloed design of the financial industry infrastructure.” Former governor of RBI D.Subbarao released the White Paper at an international conference on Distributed Computing and Network that got underway at the Institute on Thursday.
Though Bitcoin has been the most talked about application of BCT to date, new applications such as Smart Contracts have tried to exploit the technology, which is a “seemingly unassuming data structure and a suite of related protocols.” On the cost savings, the IDRBT Paper said BCT is built on the concept of sharing information across parties and consensus during transactions. It saves on reconciliation cost between banks and prevents losses because of documentary frauds.
The shift from a centralized technical infrastructure to a distributed platform, involving those in the financial eco-system, would bring in a high level of redundancy in the network. BCT would also help improve the speed of processing time of the transactions by banks and financial institutions.
Noting that the use cases of blockchain can be classified into information sharing based and digital currency based applications, the White Paper said the technology has ready applicability in the BFSI (banking, financial services and insurance) sector. These use cases help in bringing disparate entities on a common information sharing platform for deriving mutual benefits, while protecting their concerns with regard to security and privacy.