IT Pro, UK: Cognizant’s Head Of Banking and Financial Services in the UK & Ireland Says Businesses Need to Keep a Close Eye on Blockchain and Adapt and Transform Their Services

“It is certain that Blockchain has the potential to transform centuries-old mechanisms for transferring money” explains Tony Virdi. “Our latest research, which surveyed over 300 banking executives on the current payments landscape across Europe, found that cryptocurrency and Blockchain technologies are now seen as real drivers for change.” Excerpts:

“In practice, nine banks recently announced that they may adopt the Blockchain system due to the fact that “it is hard to fool, making fraud more difficult, could speed up trading systems and make deals more transparent”.

Blockchain is the technology that enables cryptocurrencies and is built on the principles drawn from cryptography, game theory and peer-to-peer networking. This allows any unique monetary data exchange to get past the problem of double spend by making the ledger (the book of record) available to all participants in the network and by creating a process by which a consensus can be reached in changes to the ledger.

However, the method through which consensus is reached for making changes to the distributed ledger differs from one cryptocurrency protocol to another.

Blockchain offers the promise of addressing some of the key challenges and pain points experienced over many years by the financial sector. Beyond the security implications and increased transparency of transactions for all parties, whether institutions or customers, it can have a beneficial impact on pricing and costs in the market. It also provides the opportunity for more accurate tracking of customer repayment histories, across borders and banks, reducing the risk of defaulters.

There are several challenges Blockchain will have to overcome before it becomes mainstream. These include scalability, the time taken to verify the transactions, the cost of transactions and, of course, security. A lot of attention recently has focused on incidents of hacking at Bitcoin-based companies and start-ups.

Regulators in a number of countries are increasingly taking steps to understand, contextualize and regulate digital currencies. Recent indications from central agencies in the U.S. and UK indicate that regulators are in fact taking a very pragmatic approach to Blockchain technology and the news from the major banks has added further evidence to this pragmatic approach.

While it is not yet clear how Blockchain will ultimately be adopted in the financial services industry, it is certain that the future will look very different.”

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