Every day there are new headlines about cryptocurrencies that occupy many of us in the regulated financial sector. From its volatility – both high and low – to a lack of oversight, to talking about decentralized finance, much of the larger cryptocurrency narrative seems a long way from the financial services sector we know. In the last 6 months alone, Bitcoin volatility reached a 14-month high, investors spent millions on NFTs just to be scammed and most recently the Squid game crypto “Squid” collapsed 11 days after it started.

While much of the chatter has to do with what is happening outside of the regulated space, one conversation that is lost is about the power blockchain technology could play in the regulated finance industry – particularly banking. Smaller commercial banks, like ours to the largest financial institutions in the country, are exploring the various ways blockchain can be brought into the bosom of banks.

Blockchains are best known for their role in cryptocurrency systems and for storing information electronically in a digital format, and although some use cases involve a token, their functionality can be applied well beyond crypto.

Some examples of how banks could adopt blockchain in the coming year are:

Payments

Using blockchain for payments and transactions is probably one of the most obvious ways for banks to adopt the technology. With stablecoin, a cryptocurrency that mirrors the value of a specific fiat currency, banks have found ways to not only speed up but also send and receive payments outside of the Federal Reserve’s “banking hours” while reducing payment costs will. International payments, in particular, are quite costly for both smaller banks and their customers, and blockchain-based payment solutions can bring instant profits for both banks and their customers.

Extra security

The ability to link payments to smart contracts enables banks to connect multiple data points, follow preset conditions, or use data to navigate transactions that require dependencies. This opens up the possibility for banks to manage complex transactions in a much leaner and more secure manner. From loan completion workflows to invoicing and supply chain financing, there are tons of ways to leverage the power of blockchain for better, safer transactions.