You must have heard a lot about DLTs and a conflict that exists between traditional banking systems and distributed databases. In this article, you will see how banks can utilize and implement DLTs for their operations.
Introduction to Distributed Ledger Technologies
Few describe distributed ledger as a database that is shared and synchronized among distributed networks. Here, every record has a timestamp and unique cryptographic signature and operates without involving any third-party or financial institutions.
Blockchain is one type of DLT, which is a peer-to-peer, decentralized, distributed ledger technology that has the potential to revamp the existing financial services. Blockchain offers immutable records of data and offers trustless storage as well.
Various tech giants and businesses are adopting and implementing blockchain for their efficient operations. Apart from that, blockchain developers, technocrats, and blockchain firms believe that banks need this technology to perform its tasks wisely, like managing identities better, trade finance, payment processing, etc.
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Issues with Traditional Banking Systems
Before understanding how HashCash can help banks serve better, let’s explore the existing flaws with the traditional banking systems.
Slow and Tedious Process
Banking services are slow in their operations as they require human resources. Moreover, they have slow digital transformations. Their online footprint is still limited to offer primary services such as transfers, deposits, bill payments, etc.
As banks as intermediaries, they charge expensive fees for their maintenance and transactions between the participating parties. Their charges are even high for international transactions.
The banking sector lacks transparency. This is because there is a belief that margins will suffer through increased transparency
Bank robbery is a determined security issue that all banks are prone to. Cybercrime is another issue that affects online banking.
How HashCash can Help Banks
Blockchain firm HashCash addresses the issues of the traditional system and helps enterprises to move digital assets and settle cross-border payments in real-time using distributed ledger technology, blockchain.
Hashcash believes that banks are “chief arbiters” of people’s identities and thus need a secure technology like blockchain to do better.
According to the recent announcement, HashCash, a blockchain-based firm, has collaborated with UAE bank to help with blockchain digital identity management. This is done to streamline the banking services and operations for the management level and for prestigious customers as well.
Over a decentralized network, Hashcash is aiming to create digital identities where the consumer data will be recorded on an immutable, secured ledger, thus eliminating identity theft and fraud. It is building a federated and sovereign digital identity scalable architecture for the UAE bank with an aim to replace the existing problems such as siloed identities, unsafe databases, among others.
Headquartered in the USA, HashCash Consultants is one of the well-recognized service providers that have been helping global banks, financial institutions, and businesses to run digital asset trading platforms across the world.
HashCash can simplify identity verification and streamline customer onboarding, along with loan applications and processing, and KYC checks for opening accounts.
HashCash’s CEO, Raj Chowdhury, believes that existing manual processes of banks make the identification process time-consuming and prone to errors. But he feels confident that HashCash’s digital identity system can support banks in making digital identities for customers on a decentralized network to prevent forgery of credentials.
Digital identity is gaining a lot of public attention these days in the cryptocurrency space. According to the announcement of June 2020, by LG CNS, it was reported that decentralized identity could replace all login functions, and blockchain-based identity systems could become the new standard for login functions. It was also reported that LG has also partnered with United States-based company Evernym for developing a blockchain identity standard for the World Wide Web Consortium.
The digital identity ecosystem will improve the ability of government agencies to work more collaboratively with their state and territory counterparts with increased security and privacy.