Finance Technology: Service Innovation Through Blockchain Adoption

This report provides an overview of service innovation in the finance sector, focusing on the application of blockchain technology. It begins by introducing the concept of blockchain as a digital and distributed ledger for transactions, highlighting its potential to revolutionize financial services. The report then delves into the key concepts applicable to blockchain-based ledgers, such as the distributed nature of the ledger, its immutability, and the consensus mechanism. Practical implementations of blockchain in finance are discussed, including simplifying payments, enhancing share trading, leveraging smart contracts, improving online identity management, and creating engaging rewards programs. The report also explores the utilization of blockchain to reduce fraud, enable smart contracts, transform payment processes, and minimize operational risks. It concludes by emphasizing the importance of managing risks associated with financial technology innovations and anticipating formal regulations in the future.

Running head: FINANCE TECHNOLOGY
FINANCE TECHNOLOGY
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................3
Service innovation......................................................................................................................3
Concept..................................................................................................................................3
Practices.................................................................................................................................4
Utilization...............................................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
Most of the parties, which are related to the financial sector, have a grasp of the
concept, which is, relate to the crypto currencies and bit coin. These aspects work on the
technology of block chain. The technology is digital and distributed ledger of transaction with
identical copies, which are maintained at both ends of the network members of the computer.
The process of reviewing of the previous entries and record of the new ones can be achieved
quite easily. The transaction are recorded one by one in a chain of blocks (the ‘block chain’)
Service innovation
The concept of service innovation directly means the way the customers are being
served to directly gain greater value and deliver more revenue relating to the organization.
Ones the concept of service innovation is taken into consideration it can be very much
beneficial and easy to implement and design own system. The prospective, which can apply
service innovation to the concept of blockchain, are stated below:
Concept
The key concept which can be applied to the concept if the Blockchain based ledger,
those which would enables efficiency future gain are distributed nature of the ledger, its
characteristics of immutability and the existence of an agreed upon mechanism of consensus.
The concept makes it possible to automate the transactions providing close to real time
settlement while the concept of control against fraud (Ølnes, Ubacht & Janssen, 2017). These
benefits do not directly depend on the exact technical implementation of any block chain. The
concept of the implementation would be working down in the near coming years. However, it
can be stated that the overview of how a blockchain works will be helping to inform about
the discussion about the potential relating to the application of the blockchain and the
challenges, which may arise in this case (Pilkington, 2016).

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Practices
The Practical implementation of the block chain technology in the field of finance are stated
below:
 Simplifying and speeding of the payment: the transfer process of the money can be
considered very much slow and on the other hand very much expensive. The concept
can be applicable to the cross border payments. The block chain technology can be
implemented which would be able to speed up and simplifying the process and reduce
the cost which is related to the process.
 Sharing trading: Share trading would be soon affecting the sector of blockchain
technology. Utilizing the technology of the blockchain allows greater accuracy of
trade and a shorter settlement of the process.
 The benefit of smart contract: one of the most promising practices of the blockchain
technology is the concept of smart contract. It can be used for the execution of the
commercial transactions and the agreement very much automatically. it also enforces
the obligation which is related to all parties in a contract – without the added expense
of the middleman
 Improvement of online management identity management: When the concept of
management of identification is moved to the concept of blockchain technology, the
user would be able to identify themselves and directly who would be informed. The
user still need to register the identity on the concept of the blockchain and after that
the reuse of the identification in order to get other services (O'Leary et al., 2017)
 Rewards and loyalty: The blockchain technology offers different types of benefit,
which may include the traceability, and the transparency of the transactions. This
would be directly be beneficial for the finance sector to create different captivating of

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rewards and loyalty of the program that fits the engagement and the enhancement of
the technology(Wright & De Filippi, 2015).
Utilization
The concept of blockchain technology has the potentiality of disrupting the financial
sector that are used in recent times. Some of the ways the utilization of the concept can be
done in the finance sector are stated below:
 It can be stated here that the technology of the blockchain is a new technology but it
has the potentiality of reducing the fraud in the finance world (Saberi, Kouhizadeh &
Sarkis, 2018). The block chain can be considered as a distributed ledger where each
of the blocks contains batches of individual transaction, which are linked to a
previous block. The technology can be directly beneficial in eliminating some of the
crimes, which are perpetuated online against the financial institutes.
 The concept of the blockchain can store any type of information which is digital,
which may include computer codes that can be processed when two, or more parties
enter their keys, the concept of blockchain enables the user to have a smart contract.
 The concept of blockchain can be highly transformative in the process of payment. It
would be directly enable higher security and lowering of the costs for the bank to
process payment between the client and organization or between bank themselves
also.
 There would be many changes, which may occur if the platform directly relied on the
concept of the blockchain-based technology. There is no doubt that there would be
minimization of the risk of operation and fraud (Tate, Johnstone & Fielt, 2017).

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Conclusion
The banking and other financial institutes are commonly subjected to the concept of
governance, control and systems for example securing system, reducing the risk, which are
related to the financial crime. It should be taken into consideration by the organization that
the formation of a new system can be very much attractive but on the other hand, if the
application is done improperly it can lead to significant risk. It can be stated that the aspect of
new, existing and emerging risk associated with the innovation sector related to the financial
technology should be identified and managed effectively to achieve the resilience, reliability
and security( for example through the concept of testing procedures and robust systems).
With the increase of the deployment of the technology anticipated within the next few years,
it is very much likely that regulation that is more formal would be addressed.

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References
Chatterjee, R., & Chatterjee, R. (2017, October). An Overview of the Emerging Technology:
Blockchain. In Computational Intelligence and Networks (CINE), 2017 3rd
International Conference on (pp. 126-127). IEEE.
Hernandez, K. (2017). Blockchain for Development–Hope or Hype?.
O'Leary, K., O'Reilly, P., Feller, J., Gleasure, R., Li, S., & Cristoforo, J. (2017, August).
Exploring the Application of Blockchain Technology to Combat the Effects of Social
Loafing in Cross Functional Group Projects. In Proceedings of the 13th International
Symposium on Open Collaboration (p. 13). ACM.
Ølnes, S., Ubacht, J., & Janssen, M. (2017). Blockchain in government: Benefits and
implications of distributed ledger technology for information sharing.
Pilkington, M. (2016). 11 Blockchain technology: principles and applications. Research
handbook on digital transformations, 225.
Saberi, S., Kouhizadeh, M., & Sarkis, J. (2018). Blockchain technology: A panacea or pariah
for resources conservation and recycling?. Resources, Conservation and Recycling,
130, 80-81.
Tate, M., Johnstone, D., & Fielt, E. (2017). Ethical issues around crowdwork: How can
blockchain technology help?. In Proceedings of the 28th Australasian Conference on
Information Systems (ACIS 2017).
Wright, A., & De Filippi, P. (2015). Decentralized blockchain technology and the rise of lex
cryptographia.

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Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where is current research
on blockchain technology?—a systematic review. PloS one, 11(10), e0163477.