Blockchain in Retail Banking: Revolutionizing the Finance Sector

Smith Johnes
5 min readSep 22, 2022


Blockchain in Retail Banking: Revolutionizing the Finance Sector

Blockchain technology has created a myriad of opportunities while serving as a differentiating factor for banks to offer better services to customers and pursue further development. The technology has so far made its mark in the corporate banking and infrastructure technology sector, while the retail banks have also shown a keen interest in this digital and public ledger.

As per the Allied Market Research report, blockchain technology in the BFSI industry is expected to witness a market share of $22.46 billion by 2026. Thus, it is one of the most profitable markets to dive into for retail banks to keep up with disrupting digital trends and innovation.

With blockchain technology’s ability to execute transactions without any central authority, boost security and reduce the operational overhead, retail banking can benefit from investing in a product portfolio that can enhance user experience. This universal distributed system has already improved efficiency among significant banks such as J.P Morgan, CitiGroup, and Goldman Sachs Group by offering new product and service development opportunities.

  • J.P Morgan, after launching a dedicated blockchain unit, has announced that it will implement blockchain technology to initiate efficient fund transfers among global banking institutions.
  • Itay Tuchman, the Global Head of Foreign Exchange at Citigroup, has announced their plans to move to cryptocurrency markets based on the keen interest of their customers.
  • Goldman Sachs has already joined the blockchain network created by J.P Morgan and has started trading in the same.

Since the major league players of the banking industry are now rooting for blockchain technology, one can easily predict its future in the banking sector. Blockchain and its advantages are bound to become the core of multiple mainstream banking processes.

Blockchain Technology in Retail Banking: Understanding the Impact

So, what is the future of blockchain in banking? One must understand that blockchain for banking is capable of cost-cutting while simultaneously allowing innovation opportunities and removing entry barriers for central banks. For instance, setting up a new bank would require considerable investments in terms of infrastructure but implementing the use of blockchain technology in banking would ultimately connect the bank to the existing network, thus reducing the overhead cost.

One of the consequential benefits of implementing blockchain in the banking industry is faster payments and affordable processing fees, which improves customer satisfaction. A decentralized payment channel further allows retail banks to promote better services, generate new products faster, provide improved security, and lower payment costs.

Additionally, blockchain in the financial industry reduces third-party verification demands, thereby speeding up major financial decisions and deals. Settling transactions directly and making way for better record keeping are other benefits of implementing blockchain in retail banking.

Applications of Blockchain in Retail Banking

Users can summarize the connection between blockchain and retail banking based on three parameters that are trust, disintermediation, and better data handling. Multiple use cases can help you understand the potential of blockchain technology in banking.

1. Cross-Border Payments

Central commercial and retail banks are tapping into the power of blockchain technology when it comes to payment processing, as well as offering their own digital currencies.

Back in the day, SWIFT or Western Union handled cross-border transactions. But now, blockchain technology in retail banking has changed the scenario.

Bank blockchains allow faster processing of international transactions compared to traditional systems. For instance, the total remittance cost while using the blockchain for banking is limited to 2–3%, while it can move to 20% when managed by a third party or intermediaries.

Furthermore, not requiring third-party authorization to process the payments makes the banking processes faster and more efficient.

2. Stock Exchange

Another significant use case of the decentralized nature of blockchain technology in retail banking is the rapid stock exchange. Traditionally, the stock exchange process involves multiple stages managed by various third parties. Thus, using blockchain for banking can help speed up the stock exchange process, thereby improving performance.

Besides, implementing blockchain solutions for financial services can remove redundant information from transactions by eliminating intermediaries.

Blockchain and banking can further connect when it comes to trading shares. The former can help keep the pricing transparent, store clear bookkeeping records and fasten the processes.

3. KYC/ID Fraud Protection

Even though online financial transaction processing is impossible without proper identity verification, the reports, as per Javelin, suggest that banks, on average, lose around $20 billion yearly to identity fraud. Retail banks have made remarkable efforts to combat thefts and fraud, but these measures have clogged up the precious onboarding time.

Authorization and authentication are a few other challenges when customers use a new service provider. Now, blockchain technology uses a digital fingerprint that is a unique identifier and allows customers to prove their identity universally.

Thus, combining blockchain and banking can save high operational costs. Implementing blockchain in the banking system can also help efficiently manage ASL and BSA complications as well.

4. Syndicated Lending

Syndicated lending is providing loans to an individual by a group of lenders. These lenders can be retail or commercial banks and are often called syndicates. Traditional lending requisites require the lending parties to undergo multiple processing stages, such as identity verification, KYC, authorization, etc. It further induces significant challenges to the banks, such as working on the KYC process, BSA, and AML procedures which are time-bound and inefficient.

Blockchain’s decentralized nature makes the syndicated lending process quite transparent and fast. The customers only have to ensure their identity once with their digital fingerprint, and all other banks can benefit from this via information exchange. Thus, blockchain and banking go hand in hand when faster and more efficient syndicated lending is to be done.

Wrapping Up

So, does blockchain revolutionize banking? The short answer to the question is yes! Blockchain technology in retail banking can do wonders if implemented in the core parts.

Despite some challenges, the significant tycoons of international banking are paving their way toward blockchain banking and benefiting from it. The use cases of blockchain and retail banking have been revolutionary when it comes to offering better customer services and streamlining operations.

From digitizing critical processes to workflows, reducing risks, and human error, blockchain in financial services has made remarkable changes. Thus, seizing the opportunity and capitalizing on the advantages of blockchain is necessary if you wish to dominate the finance world.

But how do you do that?

Partner with a dedicated blockchain development company to implement blockchain in banking sector and become a part of digital transformation. As an expert service provider that understands blockchain in banking industry, we can offer multiple approaches to implementing blockchain in the banking system as per your business needs and challenges.