Blockchain In Banking: How It Works And Can Be Used In Banking?

How Is Blockchain In Banking Transforming The Industry?

Wondering why blockchain in banking is gaining significant attention? 

With the reports predicting that blockchain in banking and financial services is expected to grow from $4.61 billion in 2023 to $7.12 billion in 2024 at a CAGR of 54.6%, it is fair enough to say that Blockchain technology has emerged as a strong force in banking. 

The global Blockchain market size is projected to reach over $248.9 billion by 2029 and greatly impact all industries, but the banking sector is among the top domains experiencing a digital overhaul through blockchain. 

Source: thebusinessresearchcompany

While the technology is well recognized for its leading characteristics of bringing transparency, accuracy, and security, therefore banks are strategically harnessing these features of blockchain in transforming traditional banking systems into blockchain-driven models with enhanced accessibility, efficiency, and security. 

The digital inception of blockchain in the fintech industry was recognized with the inception of bitcoins back in 2008 but now Blockchain technology has evolved beyond its original purpose, promising transformative changes in the financial landscape. 

But the central question is what exactly made banking systems adapt to blockchain technology and how far is the path simpler to integrate blockchain in banking? 

If you are ready to evolve your banking services with blockchain capabilities, then hire a blockchain development company for digital transformation and eliminate the roadblocks. Let’s connect for the estimations and project validation!

Why Has Implementing Blockchain in Banking Become Important?

If you are also one of those who have been looking at banking institutions, and working with traditional modules, then seriously you are at risk. Emerging technologies are among the biggest threats to banking institutions today. 

Banks are the crucial facilitator in an array of economic activities whether it be lending money, trading, transaction settlement, or payment processing. Despite having a stronghold in the market, the fintech industry is still finding it troubling to adapt to the quickly changing landscape of the modern era.  

Though 70% of banks have quickly realized this gap and are looking to advance their fintech system, navigating the way the process forward is too slow. Many banking processes remain stuck in paperwork creating inefficiencies that consume 80-90% of time and resources with higher risk rates. 

This is where Blockchain technology is gaining momentum as it is known for its decentralized and transparent nature, which is pushing the Financial services industry forward. But the question is “How is Blockchain in Banking changing the industry?”

Blockchain has revolutionized the way the fintech industry is moving. It creates a decentralized, distributed ledger system that allows for secure and transparent transactions between two parties without any need for a middleman. The ledger consists of a series of interconnected blocks each containing a list of transactions. 

The best part about using the Blockchain in banking is that once a block is added to the chain, there is no way of altering the transactions. This makes the transactions completely tamper-proof. It also uses cryptography to ensure that only authorized parties can access and validate the transactions. 

Now the straight benefits of hiring a mobile app developer to implement Blockchain in Banking is it revolutionizes the way banks operate by enhancing security, increasing efficiency, and reducing operating costs. 

Here are the quick highlights of implementing the Blockchain in banking:

• The Blockchain’s decentralized and cryptographic design can greatly reduce fraud risks, providing banks with a secure environment for transactions and data storage. 

• Implementing blockchain in banking allows to conduct of instant transactions even cross-borders as well and cuts down the traditional 3-5 days of payment processing time just to a few seconds. It further reduces fees by up to 80% and saves billions annually. 

• As transactions are once recorded on the blockchain ledger, there is no scope for making alterations, therefore it increases transparency and accountability within banking operations. 

• Smart Contracts on the Blockchain allow the automated execution of agreements without any middleman, reducing paperwork, errors, and processing delays.  

In a nutshell, the traditional banking systems are outdated and fintech companies are quickly taking over the competition with their decentralized banking platforms. So to stay competitive, banks look forward to collaborating with companies with blockchain expertise. 

Looking to transform your banking business future with Blockchain?

90% of banks are planning to invest in Blockchain solutions by 2025! Be an early adopter and leverage the power of Blockchain by partnering with Xicom.

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How Does Blockchain in Banking Work?

Blockchain in banking systems functions as a digital database that securely stores data in cryptographically linked blocks to create an unalterable chain. Each block contains critical information about the transaction such as details of the parties involved in the transaction.

Instead of storing personally identifiable information, blockchain uses digital signatures to maintain privacy and security in the banking system.

Each transaction recorded on the blockchain is distinguished by a unique code known as a “hash.” This hash uniquely classifies each transaction with 100% accuracy, even when two transactions appear identical, such as purchasing the same product twice from the same website. 

In that case, each transaction would be assigned a different hash, ensuring data integrity and traceability. 

Now the question is how much information blockchain technology can help you store.

Blocks in Blockchain can store up to 1 MB of data, which typically accommodates a few thousand transactions per block. Once a block is filled, it is sealed and linked to the previous block in the chain, creating a secure, sequential, and permanent record of all transactions.  

Blockchain in Banking: How It Can be Used in the Fintech Industry?

There are multiple use cases of Blockchain in the banking sector, quickly revolutionizing conventional processes and providing enhanced ways to increase efficiency, security, and transparency in financial processes. 

If you are still doubting about hiring a software developer and looking to understand the prominent uses of blockchain technology in Banking, then look below:

1. Expediting the Cross-Border Payment Transfers

Did you know for cross-border payment transfers, you and the receiving bank will charge around $25 as flat fees?

And trillions of dollars are annually wasted because of added fees and slow payment processing. By implementing the Blockchain in banking and finance, cross-border transactions can be expedited from days to a few seconds, and eliminate the intermediates.

This is where Blockchain’s ability to facilitate real-time, cross-border payments without intermediaries helps in completing the process in seconds and provides efficient solutions to individual and business users. 

Moreover, as the payment happens on a decentralized network, there is no need for transaction verification making the payment transfer faster and cheaper. 

2. Asset Tokenization and Digital Securities

Blockchain applications in banking allow physical and digital assets to be converted into digital tokens, which represent ownership in a secure and easily transferable way.

Fintech companies usually use these asset tokenizations to create fractional ownership opportunities in assets like real estate, stocks, or artwork. It helps companies make more feasible investment options and easier trading on digital platforms.

3. Smart Contracts For Financial Services

Smart Contracts are programmable agreements that self-execute when are certain conditions met. In the Fintech industry, smart contracts enable automation in services like loan processing, insurance claims, and investment management.

The best part about implementing a Smart contract, it enforces automation without the intervention of intermediaries, reducing processing times and costs. 

Still wondering how it will work?

For example, loans can be processed automatically, once credit checks are approved, reducing paperwork, costs, and the need for third-party verification. 

4. Identify Verification and KYC/AML Compliance

Using the Blockchain in the banking system can help you reduce the identity verification process. It simplifies “Know Your Customer (KYC)” and Anti-Money Laundering (AML) processes, by simply storing the customer information on a blockchain.

With this advancement, Fintech companies can reduce redundancy, improve data security, and streamline compliance. All they require is to outsource software development company which allows users to control and share their data securely, minimizing the risk of identity theft. 

5. Enhanced Security For Data and Financial Transactions

Blockchain’s cryptographic structure provides a high level of security for sensitive financial data and transactions. As Blockchain is decentralized data is in secure storage, therefore, it’s harder for hackers to alter information.

Implementing the Blockchain in Banking, successfully increases the data security, reducing risks of fraud and data breaches. The security aspect is critical for fintech applications handling personal and financial information.

These are the few ways blockchain in banking can be used, but the question is, how far are the pathways of implementing the blockchain application in banks easier?

Blockchain is poised to save banks up to $20 billion in operational costs!

If you are all set to become a part of this revolution in banking, then let Xicom help you lead the way with tailored blockchain development services.

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How Xicom Can Help You Adopting Blockchain in Banking?

The way Blockchain technology is impacting various industries revolutionizing business processes and automating operations, undoubtedly, Blockchain in the banking and financing sector brings many innovations in concern of lowering transaction fees, expediting transaction processing, ensuring better identity verifications, and more. 

If you are looking to upgrade the existing banking systems with modern technologies or want to leverage the maximum potential of blockchain for finance, then this would require you to look for companies offering trusted blockchain development services. Make sure, you collaborate with the company that best understands the use cases of Blockchain and is capable enough to pick a multi-faceted approach to integrating this next-gen technology in the banking domain. 

Xicom is at the forefront of providing smartly customized Blockchain development services that elevate your digital transformation journey. No matter, whether you are a huge banking institute looking to automate the business process or a budding entrepreneur starting with banking services, our secure blockchain development services are for everyone. By hiring a software developer, you can easily get started with blockchain implementation in the existing system.

Our services range from Smart Contract development, and custom blockchain development to NFT Marketplace development. Book a free slot of consultation to get access to our dedicated team of blockchain developers who specialize in delivering impeccable blockchain solutions.

Read More: 115+ Top Mobile App Ideas in 2025 For Startups, Entrepreneurs etc.

Conclusion 

At the end of this blog, it is fair enough to mention that the way blockchain technology is paving its way into various industries, is the future of modern banking infrastructure. If you are still relying on those old-tiered systems, then it is high time for banking and financial institutions to realize the transformative potential of blockchain technology and make the most of the opportunity to become early adopters.

If you are also looking to revamp your banking operations or automate the process by leveraging the blockchain features, then hire a mobile app development company. Xicom is one such leading companies strive to offer advanced blockchain development services that are secure and responsible. 

So if you are considering making a careful investment in a blockchain app for banking and financial institutes, then drop your details or contact us directly for the estimations.

FAQs

Here we have gathered additional information related to implementing the blockchain into the banking sector and help you understand the services in a better way.