Blockchain and AI as a strength to the international banking system:
- Opening an account:
Individuals can open an account or deposit cash
through their phones.
- Usability of an account:
Transfer of funds using blockchain takes only
- Costs to the financial institutions:
no need of
physical branches as payments via blockchain do not need to go through the
national payments system.
- Currency risk:
Individuals and SMEs can add funds in the fiat currency,
therefore shifting the volatility risk to the financial intermediary. Volatility
of the virtual currency removed by using bitcoin as the vehicle currency.
- AI to build credit history: Efficient collection of information to
create credit history of customers and linking it with other details
- AI as a relationship manager: AI trained Robots can become their
- AI for financial literacy: AI can undertake financial literacy endeavours in developing countries.
- Regulatory compliance: greater analytical capacity -> easier compliance
and follow up with regulatory requirements (eg. risk management,
reporting obligations) and regulatory changes
Blockchain as a disruptor to banking services:
- Hyper-personalization of Services:
Using machine learning to form a
holistic view of customer and using this to personalize products and service
offerings along with a blockchain enabled architecture that creates a
transparent and secure transactional environment.
- Driving Process Optimization:
automating high-volume, low-value
repeatable processes that are executed with high accuracy and efficiency to be
transparent, secure and error-free.
Enabling linking, encryption, and traceability, along with
various verification methods such as biometrics to create a secure, intelligent,
and agile environment.
No middleman, unadministered ledger, self-executing contracts, better
coordination using DLT (distributed ledger technology) better governance around
data sharing etc cause a potential threat to traditional banking services.
- Payments: decentralized ledger-> faster payments + lower fees. Eg-
BitPesa, Bit Pay, AirFox.
- Clearance and Settlement Systems: lower operational costs + direct
transaction settlements + better tracking. Eg- Ripple, SWIFT, R3.
- Fundraising: Initial Coin Offerings (ICOs)-> access to capital by selling
tokens or coins -> traditional investors and VCs not needed. Eg- Coinlist,
- Securities: public blockchains-> no middleman-> lower asset exchange
fees + wider global markets + reduced instability of the traditional securities
market. Eg- Polymath, Chain, tZero.
- Loans and Credit: no gatekeepers in credit industry + larger pool of
consumers-> more secure to borrow money + cheaper loan process-> lower
interest rates. Eg- SALT Lending, Dharma Labs, Bloom.
- Trade Finance: economical cross-border trade transactions-> reduced
costs of trade + documentation process+ delivery times-> more transparency,
security, and trust. Eg- Voltron, CryptoBLK, Wave.
- Customer KYC and Fraud Prevention: storing customer information on
decentralized blocks-> prevention of attacks + safer sharing of info between
financial institutions. Eg- Bloom, Ripple.