Blockchain Technology in Banking: A Study on the Implementation in Banking Services of Bangladesh

Abstract

The banking industry is the cornerstone of any nation's economy. Vulnerability in the banking sector can end up creating an economic meltdown. Transparency issues and security issues are the main vulnerable aspects of the existing banking model of Bangladesh. To eradicate the vulnerabilities and create more resilient banking model of Bangladesh, Blockchain Technology is the best potential alternative solution. Blockchain is a crucial digital method for guaranteeing the immutability, speed, and transparency of various banking activities. It offers a very secure method for transactions. The study investigates in which banking services of Bangladesh can blockchain technique be implemented and what are the current state of implementation of blockchain and the effects of them in the banking industry of Bangladesh. In this study, both qualitative and quantitative methodologies were used, and data were obtained through a survey and secondary sources including newspaper and journal articles, press releases, etc. In this study it is found that use of smart contract & blockchain makes it secure, transparent, fast and cost efficient. Additionally, the report demonstrates that the blockchain is only being used in Bangladesh's banking industry to settle Letter of Credit (LC) transactions and to send money abroad. Blockchain technology must, however, overcome obstacles like a growing network, a lack of coordination, a lack of comprehensiveness, a lack of a clear regulatory framework, and a shortage of qualified human resources. If the banking industry can overcome these obstacles, blockchain technology will replace traditional banking methods in Bangladesh. Keywords: Blockchain, smart contract, Peer-to-Peer (P2P), Distributed Ledger Technology (DLT), transparency, Immutability, Letter of Credit (LC), Remittance.