Blockchain can Stop Frauds in Banking Sectors
It is not a long time that blockchain is introduced to the world. And it’s been very less time that it potential is recognized by different industries. There are many application of it and one of them is in Banks. Banks usually works as centralized unit controlled from one point. This sole point is responsible for the management, security and all other activity happened. This centralization may be profiting at most of the place but when it comes to detecting frauds or narrow downing the fault, it faces failure.
There is a recent event of fraud in India. Punjab National Bank (PNB), a semi-government organization, was the victim of this incident. The culprit here was Nirvan Modi who was the mastermind of 11000 Crore Rupees ($1.7 Billion Approx). This all happen after March 31st 2017. Bank was about to step into another year and they found this out. So this happen when an employee found that there is a backdoor into money management system. In last five year India alone have faced fraud of 61,260 Crore Rupees and number of cases are 8670.
This recent fraud was done with an inside man named Gokulnath Shetty. He may be a former employee but he was deputy general manager in the foreign-exchange. But how can the blockchain play a fundamental role here. As we all know that blockchain is decentralized ledger and it is transparent it can make financial networks a lot more secure, trust worthy and flexible.
PNB works on the SWIFT method that is information oriented mechanism. This system work separated with payment settlement method. Every ledger is separated from the payment. All these activity are controlled or inspected by the Bank in a centralized way. Where instead of this centralized network, blockchain offer a decentralized network.
This fraud have shocked the country again and Indian banks are now stepping forward. They are ready to do the exploration. This new way of financing in India is sure going to make a big change. It is a country which is boycotting Bitcoin, Litecoin and Ripple Coin like cryptocurrencies but is now accepting that basic technology these are working on. It will be hard to settle this new dust but forging a new strategy with blockchain is sure going to help them in stopping these type of incident again.
Private bank like ICICI Bank and government Bank like SBI are already into making some new settlements. Finance Minister Arun Jaitely have spoken about the using blockchain into the finance system. This will help in growing digital economy to another height. Blockchain may be a big help in stopping the fraud but technology is still in vulnerable state.