How Blockchain Can Streamline Interbank Transactions?

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Written by
Shivani Tripathi
Published on
March 24, 2023

The global financial landscape has seen unprecedented growth in recent years, thanks to the emergence of digital technologies that have shifted traditional banking systems. One of the most revolutionary technologies is blockchain, which has revolutionized how we store, manage and transact value.

Blockchain technology offers a decentralized and secure way to conduct transactions, making it ideal for interbank transactions. As a result, banks and financial institutions around the world are now exploring the use of blockchain for interbank transactions.

In this article, we'll explore the top 5 benefits of blockchain for the banking industry and interbank transactions and how they're transforming the financial sector.

What is a Blockchain for Interbank Transactions?

A blockchain for inter-bank payment business is a distributed digital ledger that records and verifies transactions between banks.

In a blockchain network, transactions are validated by a decentralized network of nodes or computers rather than a central authority. Each node in the network has a copy of the ledger and is responsible for verifying and recording transactions.

In the context of interbank transactions, blockchain technology can be used to streamline processes and reduce costs associated with traditional payment and settlement systems. It can help banks to improve transparency, efficiency, and security in their transactions while reducing the need for intermediaries.

There are several types of blockchain networks, including public, private, and hybrid. A public blockchain is open to anyone, while a private blockchain is restricted to a specific group of users.

Interbank transactions typically use private or hybrid blockchains, as they offer greater control and privacy for the banks involved. Private blockchains are ideal for organizations that require a high degree of control over their transactions, while hybrid blockchains offer a balance between control and accessibility.

Next, let's dive into the top 5 benefits of blockchain for interbank transactions.

Top 5 Benefits of Blockchain for Interbank Transactions

1. Improved Accountability

Using blockchain for international payments can improve accountability in interbank transactions by providing a transparent and immutable record of all transactions.

Each transaction is recorded on the blockchain and can be accessed and verified by all parties involved in the transaction. This means that all parties can see the same information, and any discrepancies or errors can be quickly identified and resolved.

Blockchain technology also provides a complete audit trail of all transactions, from the initial request to the final settlement. This helps to prevent fraud and provides a higher level of accountability for banks and financial institutions.

With improved accountability, banks can increase their trust with customers and other financial institutions, leading to increased business opportunities.

2. Reduced Costs and Fees

Blockchain technology can significantly reduce the costs and fees associated with interbank transactions.

Traditional payment and settlement systems require multiple intermediaries, each of which adds its fees. With blockchain technology, however, banks can eliminate the need for intermediaries and significantly reduce their costs.

Blockchain for banking and finance also enables faster and more efficient settlement of transactions, reducing the need for manual processes and the associated costs. This can help banks reduce their operational expenses and provide more cost-effective services to their customers.

3. Increased Security

Blockchain technology provides a higher level of security for interbank transactions compared to traditional payment and settlement systems. Each transaction on the blockchain is verified and encrypted, making it nearly impossible for unauthorized parties to alter or manipulate the transaction data.

Additionally, the decentralized nature of an enterprise blockchain platform means that there is no single point of failure, making it more resilient to cyber-attacks and other security breaches.

This provides banks and financial institutions with a higher level of confidence in their transactions, reducing the risk of fraud and other security incidents.

4. Enhanced Automation

Smart contracts are one of the most powerful features of blockchain technology that can help automate many of the processes associated with interbank transactions.

Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. They can be used to automate the execution of transactions based on predefined conditions.

For example, a smart contract can be used to automatically execute a payment to a supplier once the agreed-upon conditions have been met, such as the delivery of goods or completion of services. This can help eliminate the need for intermediaries and reduce the time and cost of executing transactions.

By reducing the need for intermediaries, smart contracts can also increase the speed and efficiency of transactions while reducing the risk of errors or fraud. This can help banks provide faster and more reliable services to their customers.

5. Faster Settlements and Transactions

One of the biggest advantages of having an interbank payment system on enterprise blockchain is the ability to execute transactions in real-time.

Unlike traditional payment and settlement systems that rely on intermediaries to process transactions, blockchain technology enables banks to execute transactions directly and in real-time.

This means that with blockchain for investment banking, transactions can be settled and completed faster, reducing the time and cost associated with traditional payment and settlement systems.

Not only this, but blockchain technology enables faster and more efficient settlement of transactions, reducing the need for manual processes and the associated costs.

This aids banks in reducing their operational expenses and providing more cost-effective services to their customers. With faster and more efficient settlements and transactions, banks can also improve their overall customer experience, leading to increased customer satisfaction and loyalty.


Blockchain technology offers numerous benefits for interbank transactions, including improved accountability, reduced costs and fees, increased security, enhanced automation, and faster settlements and transactions.

By adopting blockchain technology, banks and financial institutions can streamline their processes, reduce costs, and provide faster and more reliable services to their customers.

As the financial industry continues to evolve, blockchain technology is likely to play an increasingly important role in interbank transactions and the global financial landscape. To learn more about everything blockchain and how to leverage it for your company, check out our website.

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