Significance of Blockchain in Banking and Insurance

Abstract

The chapter focuses on robustness of blockchain technology for recording a chain of transactions and maintenance of data. The initial sections of the chapter explain basic concepts like cryptography, double-entry ledger, cryptographic hashing, etc. that have been used in the development of blockchain technology. The authors explain the functioning of blockchain and its advantages in terms of time- stamped, immutable records. Blockchain represents a chain of transactions in the form of blocks that are connected through a hash unique to each block. Blockchain offers solutions to many real-world problems like recording the transactions and maintaining the records in a decentralized manner making the system efficient and yet ensuring transparency and safety. In subsequent sections, the authors discuss several use cases of blockchain in insurance and banking. The important applications include fraud detection and risk prevention, decentralized insurance and cheaper premiums, reinsurance, cross-border payments, trade finance, and compliance.