FAQHow does blockchain reduce costs for banks?
One important way of using blockchain to lower costs is through automating manual processes using smart contracts. Smart contracts are digitally signed agreements between two or more parties. These contracts are capable of performing necessary actions, such as payouts, when conditions have been met and trigger the business logic contained in the smart contract. With smart contracts, you can reduce the need for outside services like lawyers and auditors as well as reducing the time staff spends on repetitive administrative processes. Moving legacy processes to smart contracts in-house will lower your costs and reduce error rates and mistakes. Blockchain will also reduce the need for third-party partners to verify and check data. External auditors can audit a smart contract once to verify that it performs correctly, rather than repetitively checking every individual contract and document. Limiting the number of people required for diligence processes will reduce the time and cost it takes for banks to process loans. This also limits the number of people, companies, or organizations who have to monitor and store sensitive data, keeping it safer and reducing the potential for errors. This will bring down the number of data breaches, saving costs in upgrading security software, finding new partners, and rectifying errors.