Blockchain Projects Enhancing Traditional Finance

Blockchain technologies have proved to be a game-changer in various industries, and the financial sector is no exception. With its decentralized and immutable nature, blockchain has the power to revolutionize traditional financial systems, opening up new avenues for transparency, efficiency, and trust. From enhancing security and streamlining processes to enabling innovative financial solutions, blockchain technologies are reshaping the way financial institutions operate and interact with customers.

In this article, we are going to look into several projects that disrupt traditional banking.

IBM Blockchain

IBM, the multinational IT company, has a division that deals with blockchain technology and creates solutions for businesses in different industries, including finance. The company strives to make asset-related services more transparent and trustworthy by simplifying and accelerating institutions’ operations.

For example, IBM’s solution, we.trade, is a blockchain-based platform that unites fifteen large European banks to facilitate international trade. It allows buyers and sellers to create and manage trade orders, including purchase orders and invoices, enabling efficient and secure financing options. The platform also utilizes smart contracts to automate trade processes.

Another product of IBM Blockchain is helping financial netting. This is a method that consolidates or reconciles multiple payments among several parties into a single amount owed by each participant. By leveraging the transparency and immutability of blockchain, the product provides a secure and auditable platform for conducting financial netting transactions. It ensures that all participants have access to a shared ledger that records and verifies the payment details accurately.

Canton

In May 2023, the Canton network was announced by Digital Asset. This new blockchain is supposed to satisfy the needs and legal requirements of large financial companies. Supposedly, the project will offer these market players all the advantages of blockchain technology while eliminating any associated drawbacks.

In its work, Digital Asset employs a special programming language for smart contracts called Daml which allows sub-transaction privacy. What is more, Daml has a number of special libraries, tools, and pre-built models created to provide financial institutions with interoperable blockchain solutions where several applications can be updated within one atomic transaction.

Digital Asset aims to establish a "network of networks" with Canton, aiming to develop a system that enables the integration of various separate applications. This decentralized platform has the potential to be helpful to major financial institutions that face stringent regulations. By offering appropriate governance, privacy, and permissioning, Canton empowers these entities to introduce new products without sacrificing efficiency or safety. The decentralized nature of Canton provides a suitable framework for collaboration and innovation within the highly regulated financial industry.

These capabilities are currently under development, with participants scheduled to commence testing in July 2023.

Rashmi Misra from Microsoft which is a supporting partner of the Canton project, said that the company is planning to also use the power of AI to drive the adoption of the technologies.

Spring Labs

Spring Labs is an IT company that builds decentralized solutions for financial institutions. They protect customers from data breaches and ease data sharing through tokenization. The company’s products provide financial organizations with access to alternative data sources that can be used in credit assessment and underwriting processes to make decisions concerning giving out loans.

What is more, it allows financial organizations to monetize their data securely. Institutions can choose to share specific data elements with trusted third parties while maintaining privacy and control over sensitive information. This data-sharing model creates opportunities for new revenue streams and partnerships within the financial ecosystem.

Additionally, recently the company partnered with an American consumer credit reporting agency TransUnion and a Web-3 passport network Quadrata to create a product that will bring credit scoring to DeFi and Web3 apps.

Conclusion

As blockchain technology continues to advance, financial institutions have the opportunity to embrace these innovative solutions, revolutionizing traditional banking operations. By harnessing the power of blockchain, financial institutions can enhance security, streamline processes, promote financial inclusion, and foster collaboration within the industry. 

While some skeptics draw attention to past failed initiatives such as Meta's Diem, the widespread adoption of an already existing and wide array of new emerging products by major players in this sphere suggests a higher likelihood of success of the technologies.

If you want to read more about real-life applications of blockchain technology in various spheres, we have articles about healthcare, education, fashion, and space.