Impact of Blockchain Technology in Financial Services Sector

Abstract

Blockchain technology has brought a disruptive potential to various industries, especially in finance, by promising increased transparency, security, and efficiency within transaction process. The study is focused on exploring what disruptive effect blockchain technology may have on the Finnish banking sector in terms of its adoption, benefits, challenges, and possible recommendations for successful implementation. This research investigates the impact of blockchain on operational efficiency, customer experience, and competitiveness in Finland's banking industry. The research is also a combination of both primary and secondary research. Primary data collection was conducted through structured questionnaires among employees working in Finnish banks, supported by a secondary data source on the application of blockchain in finance. The insights of primary data focused on employee perceptions about blockchain adoption, while simultaneously providing an overview of the global application of blockchain in financial institutions, hence identifying an industry trend. The study showed mixed feelings of excitement and skepticism among employees with regard to the benefits accruing from blockchain. While most agree that it has the potential to enhance transparency, efficiency, and security, regulatory barriers, high implementation costs, and shortage of skilled personnel are some of the noticeable preventions. The results show that while blockchain bears the potential to disrupt traditional banking by streamlining their operations and reducing intermediaries, many things are yet to be done to ensure widespread adoption and acceptance. These findings stand in concert with the literature on the promise and pitfalls of blockchain in finance. The paper concludes with strategic recommendations for Finnish banks on how to maximize the benefits accompanying blockchain by addressing the challenges in its adoption. This would include increasing collaboration with FinTechs for quicker integration of services, investing in scalable infrastructure, and close collaboration with regulators for the setup of clear compliance frameworks. The value of this contribution is that, for the first time, this paper addresses blockchain adoption at an industry level within Finnish banking. It provides hands-on, evidence-based recommendations for how banks can capitalize on blockchain to improve their operational.