Banks Need to Be Centralized – Could Blockchain be the answer?



Banks Need Centralization


The queues in banks have lessened, the digital transformation is progressing, few people are for banks getting redundant, and few believe banks to rise and serve as the operating system. However, I vote –  Banks to be centralized! And to some degree, Blockchain could help banks to achieve that.

Why Banks Need to Be Centralized?

Unlike olden days when data/information was maintained in the ledgers and files, now data could be cryptic and stored on cloud servers. So, if the account information that was fed in ABC city, why that can’t be accessed from XYZ city?

Thanks to globalization that customer is not at “one place” now. He might have taken birth in a town and then moved to ‘n’ number of cities for reasons from studies to job to marriage! And each time he cannot raise a “transfer request.” Yes, the services are available online and could be managed. But in a critical situation like “Demonetization in India” where people were asked only to visit their respective home branch, then it gets tough!

Or what about the situation when people need to change their mailing address, and that could only be done from the “home branch.”

Centralization of Banks Could help us –

  1. Maintaining single account
  2. More control over cash as no more distributed liquidity to keep another account active
  3. Easy in scrutiny for tax authorities
  4. One account for all – be it salary account, pension account or savings account makes life simpler.

Blockchain – A Decentralized System Could Help in Banks Centralization


Blockchain the distributed ledger network could assist banks to achieve centralization using their permissioned network technology.

  1. Adopting Blockchain – Setting up a distributed network with no centralized authority
  2. Persmissioned Network – The participants would only be the people who own a bank account or avail banking services making it a safe and compliant network
  3. Information Flow – With a banking service availed in city ABC it could still reach and connect to the overall network, because of smooth data flow. No restrictions and no limits.
  4. High Level OF Security and no issues of Data Theft – With the use of Blockchain-enabled technology, the need to store information with the third parties gets eliminated. Proof of identity is stored in a cryptographic format making it hard to be hacked or stolen, thereby increasing security levels.
  5. One Shareable source database – Usage of one database makes it more scalable.
  6. Seamless Integration with IoTs and AI – With the adoption of Blockchain, the banks could be integrated seamlessly with IoT’s and AI technology making it easy for a person to pay for grocery bills when his refrigerator alerts him that veggies are due for this week.
  7. One Account For all – Looking for trading in NASDAQ or the government benefits, one account for all would make life simpler.

Experts believe Blockchain has disruptive powers that could transform any process from a simple documentation to a complex cross country settlement to be automated just with few clicks.

Adoption of Blockchain by Banks would not only help people who use bank services but also individuals who are unbanked and looking to still figure out what a Bank is? Just imagine a person in rural India gets his biometrics done and submit his eKYC, opens his new bank account and takes a loan for his farming! All this is achieved within a couple of minutes and is a possibility with Blockchain.


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