Blockchain has the potential to make the financial services industry more transparent, less susceptible to fraud and cheaper for consumers, according to an article on the money section of USNews.com.
The piece highlights how blockchain can make the financial industry more transparent since users are performing activities on a public ledger, which can expose inefficiencies like fraud, leading to problem-solving that could reduce risk for financial institutions.
From a security perspective, consumers are less prey to scammers as payments and money transfers made on the blockchain are faster and more traceable than in traditional banking.
Furthermore, when information flows through different financial intermediaries, there is a risk of interception of that information, raising the possibility of fraud. This oversight vulnerability can be filled with blockchain’s cryptographic algorithms that bring security in the exchange of information between parties, the article argues.
“In traditional finance, clean audit trails can be difficult to procure at times, which have led to severe economic losses in the past due to negligent behaviour or malicious actors,” says Ben Samaroo, co-founder and CEO of decentralised finance platform WonderFi. “This risk can be significantly reduced with a combination of blockchain technology and machine learning to monitor and manage risks with a high degree of precision.”