Noku Academy

How Blockchain is disrupting Banking industry (part 2)


This is the second part in a two-part series. You should read the first part first.

As interest towards Blockchain grows, the biggest question is: will the traditional banking industry adapt to this new technology or be replaced by it?

Global banking is currently a $134 trillion industry. The scope of Blockchain as a trustless, decentralized ledger is to disrupt all of that, including:

  • Account Deposit
  • Loans and Credit
  • Insurance

Account deposit and withdrawals 

Very few people understand how the modern banking system really works.
Most consumers don’t investigate on what banks actually do with your money after you deposit it in a bank account. Once you deposit money into a bank account, the bank loans most of it out through reserve banking.

They actually only hold a fraction of the money their customers’ deposit as reserves.

Tracing the money after this stage becomes rather impossible. As blockchain is ultimately a ledger that represents accounting entries, traditional banks will have to change their system or be more transparent.

Loans and credits

There is a straightforward relationship between banking and financial services and insuring deposits and loans. The banking system has however been proven to be highly unreliable and vulnerable even in the most developed countries. Nowadays, securing a loan or mortgage to buy a car can take more than a month.

A system for loans created on distributed ledger technologies is more resistant to bankruptcy since one specific organization does not control the deposits.

Lending on the blockchain might offer a more secure and efficient way of making personal loans to a broader pool of consumers.


Blockchain is also relevant when it comes to insurance, by automating payments on multiple cases.
Smart contracts can be implemented to automatically execute transactions when certain conditions are met. This eradicates the bureaucratic delays that are right now caused by a large number of managers who are in charge of making payments possible.

Smart contracts technology can easily improve Insurance processes, making them cheaper.

You may also like