Blockchain in Indian banking sector has gained momentum in the last few months as more and more banks continue to join the blockchain consortium for process improvements.
During an interview with Moneycontrol.com on Sep 11, Akhil Handa, Head of Fintech & Partnerships and Mobile Banking at Bank of Baroda, extended his sincere appreciation to this futuristic technology for enabling banks around the world to focus more on customer satisfaction than working endless hours in handling and managing accounts.
Under the leadership of Handa, a fintech entrepreneur and enthusiast, and blockchain are proven a track record in banking, India’s century-old public sector bank is all set to move towards a digital future gradually.
Handa emphasized went on to highlight how the technology-of-the-future will help the bank penetrate new markets and acquire a bigger market share. According to him, blockchain technology is the way forward and has dramatically changed the face of several industries like healthcare, retail, and energy. It is only a matter of time that it makes traditional banking practices obsolete.
The pivotal role of blockchain in Indian banking sector
For starters, it can quash the role of intermediaries during transactions and drastically reduce transaction costs in financial services. The properties of decentralization, transparency, and immutability will bring in the process efficiencies, he states with confidence.
Handa points out that until now, data sharing and collaboration among corporates has entailed a considerable amount of manual intervention, making it vulnerable to frauds and miscommunications. With the introduction of smart contracts, a lot of it could be digitized, leaving minimal scope for tampering.
With blockchain integration, Bank of Baroda intends to test application scenarios around trade finance and invoice discounting. Besides, it will also verify blockchain use cases in eKYC.
Challenges that lie ahead
There is no denying that blockchain can revive an industry which is not as thriving as it used to be, and banking is one of them. However, blockchain application has its fair share of challenges and Handa is quick enough is acknowledge that.
Per him, although blockchain reduces overall operational costs over a period of time, its initial set up cost is very high. Besides, the scalability issues and compatibility with different consensus mechanisms make it more challenging.
That being said, the challenges are common to all and several banks have overcome these hurdles successfully. It may necessitate radical changes but in the end, the enticing new prospects every emerging technology brings with it is too hard to overlook.