How Banks & Financial Institutions can use Blockchain Technology

Apart from cryptocurrencies, there are several other important use cases for Blockchain technologies in the banking & financial sectors.

NFT 

Non-fungible tokens (NFTs) are new digital assets.  In a nutshell, NFT is a crypto block – which encapsulates digital art or record. The digital art/record is tokenized – just like recording a payment transaction in a blockchain, it becomes a certified true copy – whose authenticity & Ownership can be verified by any node in the crypto-chain network. This token (also called NFT) can then be traded on the blockchain network just like any cryptocurrency.

Today, the world is experimenting with NFT for digital art or digital records. For example, Twitter CEO Jack Dorsey sold his first-ever tweet as an NFT for more than $2.9 million!

Ownership & Transfer of Financial Instruments: 

One of the biggest use cases of NFT in the financial world is recording ownership of financial records: Bond/stock certificates, insurance policies, etc can be tokenized to record the ownership of financial assets, and then these NFTs can be traded on the crypto network.  

Payments, Remittance & Reconciliation

Unlike cryptocurrencies, banks can create & issue crypto tokens that are tied to a fixed value – which can then be transferred over the network for instantaneous payments and remittances without the need for a central bank’s approval. JPCoin is a good example of this.

Servicing of Instruments

Once the ownership of financial assets is tokenized, Payments as per financial contracts such as Bond coupons or dividends can be made programmatically to the current owner of the Financial instrument accurately.   

Storing KYC information & Anti-Money Laundering Registers

KYC information is nonfungible data that can be tokenized so that these records cannot be altered by hackers, and also be used for rapid ID identification across the network for rapid transactions. As the pace of transactions increases, the current data warehousing systems impose certain limitations and the use of NFT for KCY AND AML Registers can speed up global financial transactions.

Regulatory Reporting

Regulatory Reporting should be a nonfungible report as it has major implications. Countries and participating Banks can use the crypto network to get, store and use all regulatory reporting data. These reports can then be shared securely in the crypto database with multiple regulators and other governing bodies.