Will Blockchain Technology Disrupt the Global Banking System?


Blockchain technology has been at the center of a lot of discussions, often portrayed as a revolutionary tech that has the potential to revamp several industries. While its application in other industries is still very much in the nascent stages, it is undoubtedly poised to improve various aspects of the traditional finance industry, including retail banking, capital markets, and asset management. Its significance is often compared to that of the internet in the early 2000s, which saw the rise of e-commerce. That revolution gave small and medium businesses an opportunity to carve out opportunities for themselves; blockchain technology is expected to help them do so even more.

A report by the World Bank suggests that nearly 1.7 billion adults remain unbanked, lacking an account with a financial institution or mobile money provider. Documentation remains a significant problem for those trying to access financial services, but blockchain technology overcomes that problem by bringing the unbanked into the global economy through just a smartphone and internet connection. Additionally, the technology eliminates the problems of privacy, security, and efficiency that plagues the current systems employed by financial institutions.

We examine how the technology can benefit several critical industries, both at the consumer and enterprise level.

New Forms of Payment

There’s no question that the lawmakers and incumbent entities are warming up to the idea of assets issued on the blockchain. Perhaps not in the same sense as Bitcoin, but nonetheless, with all the talk of Central Bank Digital Currencies, there is a palpable shift towards digital currencies in some form.

The news of the year is undoubtedly social media giant, Facebook, and its decision to launch a basket of currencies via its stablecoin Libra. Several notable companies from multiple industries have joined the Libra Association, with the aim of improving global financial inclusion, and simplifying international trade and commerce for consumers. While the original plan seems to have been scuppered, Facebook is intent on bringing blockchain-based remittance solutions to the market.

As further evidence of the move towards a digital economy, the United States’ largest bank, JP Morgan Chase, has decided to launch its own token for internal purposes, the JPM Coin. Designed to reduce settlement time and costs for cross-border transactions, the token is similar in its intention to that of Ripple. Clearly, multiple entities see the value in utilizing a token for international transactions. Like Facebook’s Libra, one JPM Coin is the equivalent of one US Dollar – though it has a much narrower purpose.


Since the 1970s, international transactions have been executed via a messaging system called SWIFT, which features over 140,000 financial networks. The network is essentially a relay system that tells the destination bank that an account from the source bank has sent money – the message hops from one member to the other until it reaches the destination. While this has served us well so far, it is not without its problems: it can many days to process a transaction and it is often expensive. This is unsurprising, given that there are multiple intermediate banks involved, all of which take a small fee for processing the transaction.

However, we now have the technology that can drastically eliminate the time and fees associated with international transactions. Besides Bitcoin and other payments focused tokens as a means of exchange, some tokens are specifically marketing themselves as an enhancement of the SWIFT system, most notably Ripple. The latter’s RippleNet is a network of banks, currently, with over 200 members, that utilize Ripple’s solutions to facilitate practically instantaneous transactions at a fraction of the cost it would take to execute the same transaction via SWIFT.

Decentralized Applications (DApps)

Decentralized Applications (DApps) are considered the next generation of applications, fuelled by tokens that provide myriad benefits to the stakeholders of the DApp ecosystem. Just as the internet and smartphones gave the masses greater access to information and opportunities through mobile and web applications, so too are DApps expected to revolutionize the financial industry by drawing in the previously excluded to global financial services.

Immutable Records

The immutability of blockchain data has been discussed extensively and finds applications in several verticals. Removal or modification of data is practically impossible so, once verified, data effectively become permanent. It would require an impractically large amount of computing power in order to make a change to the data. In combination with being transparent, this makes blockchain ledgers suitable in the fields of auditing and voting, among many others.

Additionally, cryptocurrencies are secure, as decentralized technologies have no single point of failure, unlike centralized systems like that employed by banks and other financial institutions. As an example, one Seattle resident managed to gain access to sensitive data belonging to 100 million Capital One customers. Shortly after she posted the data to her public GitHub account, the bank was forced to release a statement and mitigate the damages.