The banking sector in India is always ready to adopt new technology in order to provide superior customer service. There is a stiff competition among public and private sector banks in India to attract new customers. After digital banking, blockchain technology is a new technology which many banks are slowly adopting in India. This technology will prove to be a major breakthrough for banks who want to speed up transaction process. A transaction which takes 2-3 days can be carried out in just a few minutes through this technology.
ICICI bank was the first bank which adopted this technology in India. They have successfully carried out their first two transactions using this technology. The first transaction was a Mumbai-based party who deals in shredded steel. Many other banks are also showing interest in this technology. Axis and Kotak Mahindra bank are the other two banks who will be adopting this technology. They are exploring this technology and are trying to find out whether there is any business model which can fit into this technology. They want to know how lucrative will be this technology for them.
In simple words, Blockchain is a technology is like a public ledger of all the transactions. It stands a proof of all the transactions that have been carried out by the bank. All the transactions get recorded in the system in the form of blocks as a permanent database. It serves as a history of all banking transactions that have been carried out.
Every ten minutes a new block is appended to the block chain. Blockchain gives a transparent view of each step carried out in the transaction. Where there are transactions involving a high level of complexity, this technology will prove to very much beneficial. Blockchain will eliminate any chances of duplication of data.
Kotak Mahindra is exploring this technology by carrying out cross-border remittances. The bank is also taking the help of some other international private banks. Cross-border remittances take longer time in processing. So this technology can prove to be very much handy over here. The processing time of the transaction can be reduced from 2 days to just a few minutes for cross-border remittances.
Axis bank is also keenly showing great interest in this technology. Senior officials of both the banks have confirmed about trying different avenues. And blockchain technology is one of it. Axis bank wants to introduce a full-fledged product in it which will benefit the customers. Like Kotak Mahindra, Axis bank is trying to explore if this technology can be used for foreign transactions.
Both the banks are trying to see the cost-benefit involved for this technology. Even corporate banking is one avenue where this opportunity can be explored. Banks are keen to use this technology but they want to do after analyzing each and every aspect. It should not ultimately affect ease of doing transactions. They want to take sufficient time before introducing any product.
RBI as an apex body has not raised any objections for banks exploring out this technology.