Can Blockchain Foil Bank Frauds?

The recent bank scams are surely not helping the common man to have a good night sleep. However, with the growing focus on digitization of backend processes and the buzz around blockchain, would the banks’ accountability improve?

- Vanita Peter D’souza

In February, when the Punjab National Bank (PNB) scam came to light, most cribbed about another businessman (Nirav Modi) looting the tax-payers money through one of the most trusted financial institutions. This was not the first time. In the past too, similar scams had happened and hardly any lessons were learned. In fact, according to the Reserve Bank of India (RBI), over 23,000 cases of bank fraud, worth Rs 1 lakh crore, have been reported in last five years. Increase in the number of non-performing assets (NPAs) along with such fraud cases, raise serious concerns about the health of the industry. Is there a solution to it? Not yet. However, if the banks start minimizing human intervention in majority of their processes and improve accountability, it might bring in some relief. In the recent times, adopting blockchain is one of the best ways through which the banks can improve their accountability. The technology enables trust to be formed between multiple stakeholders, by having data shared across a distributed ledger.

Giving an example, Chris Vincent, Project Manager, Elemential Labs, says, think about how Google sheets work as compared to the Excel. “In Excel, we have the opportunity to edit and then send it across via email, etc. This is very inefficient if multiple people are working on a particular file. On the other hand, Google sheet allows you to create a shared document that can be accessed and edited simultaneously by multiple stakeholders,” he shares, while adding, “This is what blockchain does for business problems that exist due to information being stored in silos. You could use this to create faster credit reports, reduce instances of fraud and solve a wide variety of problems.”

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