HYDERABAD: Post the Punjab National Bank fraud, the Indian industry is calling for the adoption of hi-tech control systems to check financial frauds and blockchain technology is being touted as a promising solution.
Several banks under State Bank of India had recently formed a consortium and launched BankChain to explore blockchain tech in banking and financial transactions. However, the recent incident has given more impetus for blockchain proponents.
“Blockchain technology has the potential to prevent irregularities and frauds. But it’s still premature to see to what extent and how effectively can we leverage the same in banking operations to avoid frauds and irregularities,” points out Avtar Monga, ED, IDFC Bank, commenting on blockchain tech’s relevance in banking.
In this milieu, where the banking community is open to exploring blockchain tech but is looking for more proof, PNB fraud has given scope for blockchain experts to highlight its features and the potential it has in preventing financial irregularities.
“Blockchain is a distributed ledger, which can be updated at multiple locations simultaneously in real time. Therefore a person or organisation cannot register or effect a change in a transaction, on their own, without the knowledge of others. Any transaction recorded on blockchain will be registered across all the points in the entire chain of parties involved in transaction, thereby making it transparent and eliminating the scope for collusion among few and frauds. Blockchain tech can surely avoid frauds like PNB scam, as the parties involved in the entire chain of issuing LOUs, would have been well informed and alerted about all the transactions,” explains Ritesh Modi, blockchain expert and evangelist.
According to experts, this emerging tech can play a key role and can also eliminate much of the manual intervention in financial transactions like money remittances, inter-bank payments and settlements, auditing, property registry, seamless forex markets, post trade processing in capital markets, global trade finance, digital identity, digital rights management and others.
Kishore Seshagiri, EVP and head of Block Chain Center of Excellence, Broadridge India also refers to Blockchain as being ‘multiple copies of a giant spreadsheet’ which ensures decentralised and distributed information, mutual consensus, cryptographically secure and immutable, thus highlighting that it is highly unfeasible of all parties in a transaction conniving and attempt a fraud.
Experts working on blockchain tech are confident about it as the emerging tech, which can avoid banking frauds in future.