The world of banking has always sought for smarter ways to do things. With the coming of the blockchain and smart contracts, it seems that there are a lot of innovations open to them. Blockchain can boost monetary effectiveness by diminishing manual control. In intercompany exchanges, blockchain will make one variant of the record permitting intercompany straightforwardness and settlement at a similar moment. This will permit Finance to concentrate more on esteem creation exercises. The utilization of brilliant agreements will upgrade the administration and consistency of intercompany transactions.
The upside of one single database is that it holds all transactions, permitting to follow exchanges, supporting documentation, and accommodate bookkeeping passages. Compromises among divisions and auxiliaries will turn out to be nearly at a similar moment while guaranteeing straightforwardness over all the invested individuals.
Because of the changeless computerized record that blockchain innovation gives, the Triple Entry Accounting idea can apply where all bookkeeping passages including outside gatherings are cryptographically fixed and connected through a savvy agreement to a third section.
Algorand Smart Contracts at Layer-1 (ASA) is designed to solve the issues in the banking world that comes with using an intermediary. The banking world suffers from issues like delays, costs in delivering services to their clients, and so on.
Algorand smart contracts solve this because it eliminates the need for intermediaries, which are plagued with issues.
What Are the Current Problems in the Banking Sector That the ASA Technology Can Solve?
The banking sector, currently, is far from being perfect, as it has a lot of issues.
- Clients do not have access to global, as well as the digital markets.
The typical banking system is quite slow, not minding that we are living in a globalized world. Before someone in a country can make a transaction to someone else in a different country, a lot of hurdles have to be passed. Before you know it, days may go by and the transaction may not be made.
With Algorand, users can have access to global digital markets. They can carry out transactions with Algorand atomic transfers, not minding where they live.
- Not being able to transfer when they want.
It is no news that most traditional banking activities have a time that operations end. This can be annoying to users that want to do instant transaction and can't wait for banking operations to begin.
The business world is a busy world that works in real-time, meaning that those transactions that are not made immediately could lead to loss of a large amount of money.
Algorand atomic transfers solve this, as transactions can be done anytime and any day. There is no downtime.
- Having to wait for a long time before a settlement is made.
One thing that the business world does not have is time. Transactions have to be settled instantly, and this can't be seen in the conventional banking world. With the ASA technology, one doesn't have to worry about this.
- The typical banking world may not make it easy to enforce asset controls
Algorand Smart Contracts offer the standardized, Layer-1 system that works with any kind of asset, be it fungible or nonfungible.
Other Ways the Banking Sector Can Benefit from Algorand
- Clearing and Settlements
The usual procedure of clearing and settlements is a complex one.
With smart contracts, the complex procedure is made easier.
Every transaction comes with terms and conditions, and once they are met, the smart contracts will become actionable. This ensures that the high cost of clearing and settlement is reduced.
Apart from that, the process of clearing and settlements will no longer have to deal with human errors when smart contracts are used.
- Compliance and Know Your Customer (KYC)
From time to time, the regulation of the financial services in a region might be altered and financial institutions have to change the way they do things.
Aspects that are altered regularly are the KYC and anti-money laundering guidelines. When changes like the above occur, the financial world is burdened. They have to deal with high costs of making these changes. Their clients have to deal with their transaction processing period being slow.
The ASA technology, when incorporated into the banking world, can help solve the issues that come with changes in regulations.
- Better Customer Experience
Before some transactions are initiated in the banking world, identities of the parties involved have to be checked. The conventional verification systems used in verifying clients take a lot of time and money. This could leave one's clients tired of the inefficiencies.
With the ASA technology, a client with his or her private information saved in the database can easily be verified. This ensures that transaction costs are reduced and response time is better.
The banking sector will benefit from the ASA technology through:
- Regulated disbursements
- Fee execution
- Escrow accounts
- Decentralized exchanges
- Reimbursement validation
- Collateralized debt
- Delegated / high security account managementand so on.