Expert Comment: How Has Blockchain Revolutionised The Finance Industry?

Blockchain technology, once a niche concept known only by those in advanced tech circles, has started to take other industries by storm.

In fact, as a technology that offers security and transparency, it’s no surprise that blockchain has become a valuable tool in the world of finance. From helping make easier FX transactions, to changing how money is tracked and traded, blockchain’s impact on the industry has grown massively in recent years.

But What Is Blockchain?

Blockchain is a decentralised technology network that records transactions across multiple computers. This makes the data more accurate and secure as it’s not simply stored in one central location.

Each transaction is added to the overall ‘chain’ creating a network that is difficult to alter or tamper with. What this means in practice is that no single person or data centre has control of the blockchain. Instead, it is part of a wide network of computers that regulate and record each transaction.

Given that the blockchain is an interconnected web, this means that every transaction is visible – making the process more transparent.

In essence, blockchain provides a reliable and tamper-proof way to record transactions and store data, making it a useful tool in industries such as finance.

Here, we ask the experts exactly how they think blockchain is revolutionising the finance industry.

Here’s what they had to say…

Our Experts

• Henry Humphreys, Managing Partner at Humphreys Law
• Brian Gallagher, Co-Founder at Partisia Blockchain
• Mikhail Dunaev, Chief AI Officer at ComplyControl
• Pannathorn Lorattawut, CEO at VUCA
• Daniel Field, Director of Innovation and Global Head of Blockchain at UST
• Kate Leaman, Chief Market Analyst at AvaTrade

For any questions, comments or features, please contact us directly.

Henry Humphreys, Managing Partner at Humphreys Law

“The fact is that blockchain as a technology – dispersing control of an encrypted ledger across a large number of users and where the majority rules as to what it says – has as yet barely scratched the surface in terms of disrupting traditional finance markets. Adoption and development were set back by the collapse of FTX in 2022 and the fraudulent actions of SBF plus his retinue, and volumes of trading and investment are only recently starting to come back although into a regulatory environment that is struggling to keep pace (and in some major jurisdictions remains openly hostile).

“Across the board rooms of major financial institutions, there work is needed to establish DLT as a form of technology that is not synonymous with money laundering, criminal finance and fraud. That is going to be a handbrake on the speed of adoption. So too are large sections of the public yet to be engaging daily with widely-adopted use cases, but there are many promising projects out there which may one day grow in influence such that DLT is thought of in much the same way as iOS and Windows are thought of now.

“A turning point for traditional finance may be when prudent planning dictates that major institutions build (and control) their own (non distributed) blockchains rather than face disruption from truly distributed ledger technology. If they succeed, the irony will not be lost on the crypto zealots. Henry is writing this from Latitude 59 in Tallinn, Estonia, which is a country where the government has put all its public records on its own blockchain.”

Brian Gallagher, Co-Founder at Partisia Blockchain

 “Blockchain has revolutionised the finance industry through several key advancements.

“One of the highlights includes introducing a decentralized framework that removes the reliance on central authorities like banks. This shift enhances transparency and empowers individuals by allowing peer-to-peer transactions, providing them with more control over their financial activities. It also provides a 24/7 automated, real-time settlement and clearing network— a major upgrade from the traditional banking system—enhancing trading and cross-border payments. 

“Security and transparency are also greatly enhanced through blockchain’s cryptographic principles. Each transaction is immutable and verifiable on a public ledger, making fraud exceedingly difficult. Modern technologies like multiparty computation (MPC) further ensure secure data encryption and analysis. Additionally, the public ledger fosters trust by making every transaction accessible and auditable. This transparency can even extend to government spending, ensuring tax dollars are spent properly and addressing concerns across the political spectrum. Moreover, blockchain reduces transaction costs by eliminating intermediaries and streamlining processes, while AI-powered software minimises the need for manual labour in auditing.

“Smart contracts and financial inclusion represent other significant advancements brought by blockchain. Smart contracts, which are self-executing with predefined rules, automate processes, ensuring compliance. This automation streamlines operations across various financial activities. Furthermore, blockchain technology provides access to banking through decentralized platforms and digital currencies, fostering a more inclusive financial system. This inclusion is particularly beneficial for individuals in regions with limited access to traditional banking services, promoting a more equitable financial landscape globally.”

Mikhail Dunaev, Chief AI Officer at ComplyControl

“The way I see it, there are three notable ways in which blockchain has revolutionized the financial industry: transparency, security, and the ability to utilize smart contracts. 

“Blockchain ensures transparency by allowing anyone to trace the origin and destination of funds, making financial transactions more accountable and set in stone. For example, if taxation processes were to be transferred to the blockchain, every cent of tax revenue could be tracked, ensuring that the money went where it’s supposed to.

“The same idea also applies to the security of payments, as blockchain transactions are irreversible, unlike with traditional banking. This immutability increases trust in payments, as each transaction is permanently recorded on the blockchain.

“Finally, we have smart contracts that can automate financial processes and potentially replace entire financial institutions such as small-time banks or payment systems. The self-executing nature of smart contracts means that intermediaries can be excluded, reducing the potential for human error. Furthermore, these contracts are fully transparent, ensuring that users can trust the result of their execution.

“Blockchain is still evolving as a technology and the process is slow-going down because this field is often associated with criminal activities, which undermines public trust. However, with the advancements in artificial intelligence and the gradual development of more secure and user-friendly blockchain processes we can anticipate that most financial transactions will eventually migrate into the blockchain space in the future.”

For any questions, comments or features, please contact us directly.

Pannathorn Lorattawut, CEO at VUCA

“Blockchain technology has driven many new investment opportunities that pose attractive risk-return profiles for investment portfolios.  The emergence of this new asset class can be an important diversifier that no one can disregard.

“The existence of blockchain lessens the need for intermediaries, which poses a challenge for traditional banks. The streamlining of cross-border international fund transfers is one example where blockchain-based payment systems facilitate faster, secure, and affordable transactions.

“Blockchain technology has also promoted financial inclusion in areas such as lending, borrowing, and asset management by lowering barriers to entry and providing cost-effective solutions to non-bank participants without boundaries.

“AML, KYC, and custody are in the spotlight when it comes to blockchain transactions. The complicated nature of this fast revolution impacts the regulatory and compliance standards governing the global landscape. With how quickly this space is developing, customer protection remains the utmost priority for the financial industry.

“As blockchain adoption increases, it’s improving operations and empowering businesses and individuals to transact more seamlessly and transparently. Its data storage and transportability enhance its speed and credibility, even though it comes with the challenge of private data protection.”

Daniel Field, Director of Innovation and Global Head of Blockchain at UST

“Blockchain already shook the finance industry once by enabling the creation of a brand new asset class in the form cryptocurrencies, now worth $2.7T of which Bitcoin accounts for half. Whilst this emerged gradually over 15 years, and has largely been the sphere of private investors, the mainstream industry is now on the verge of a second major aftershock, one that will have a much swifter and more profound impact. Distributed ledger technology (DLT) holds high promise thanks to simplified reconciliation, reduced scope for error and omission, ironclad auditability and complex automations that can be fully trusted by multiple organizations.

“Consequent efforts by major banks and other actors are now coming to fruition. Trading and settlement by commercial and investment banks has already started and is spreading into all areas including wholesale and retail banking, payments, central bank operations, commodities, equities, and real estate. With it expect lower costs, faster transactions – especially complicated processes such as cross-border payments. With smart-contract based programmability enabled expect new services and new products to emerge: UST has already shown – through the Bank Of England’s CBDC project Rosalind – that such platforms unleash private sector innovation. It’s the same technology but this time it’s different; security, privacy and compliance are the bywords of this quiet inevitability.”

 Kate Leaman, Chief Market Analyst at AvaTrade 

“Blockchain technology has transformed how the finance industry operates. The technology works as a decentralised ledger, where every transaction is recorded and visible to all participants in the network. This level of transparency helps to reduce fraud and errors, as everyone involved can verify the transactions.

“Another major benefit is the enhanced security it provides. Blockchain uses advanced cryptographic techniques to secure data, with each block of data linked to the previous one, creating a chain that’s difficult for hackers to alter. This security feature is crucial for maintaining trust in financial transactions.

“Cost reduction is also an advantage. In traditional financial systems, intermediaries like banks or payment processors are often involved in transactions, and they charge fees. Blockchain allows for direct peer-to-peer transactions, cutting out these middlemen and reducing costs. This is especially beneficial for international transactions, where fees can be high.

“What’s more, traditional cross-border payments can take several days to process. With blockchain, these transactions can be completed in minutes. This speed makes financial transactions more efficient and also opens up new opportunities for global trade and remittances.

“Ultimately, blockchain is making the financial industry more transparent, secure, and efficient, benefitting individual consumers and financial institutions alike.”

For any questions, comments or features, please contact us directly.