Could blockchain technology help banks save billions of dollars in fines?

Banking giants including JPMorgan Chase, Citigroup and HSBC have paid more than $235 billion in fines since the 2008 financial crisis.

Interestingly, most of the fines were caused by inefficiencies in the banking system that failed to track the mortgages and insurance products sold.

According to financial data provided by Reuters, mortgage fines for major U.S. banks accounted for nearly $150 billion, among which the largest banks in the United States, including Bank of America, JPMorgan Chase and Citigroup, were fined billions of dollars for failing to maintain ledgers of all mortgage-related documents.

Mortgages are similar to many other financial settlements, however, the documentation required for mortgages can include pay stubs, profit and loss accounts for business owners, lists of assets, bank statements, mutual fund statements, and more.

The current financial system and banking applications cause banks and financial institutions to put all documents and data into a single mortgage contract.

Furthermore, the lack of transparency and security in the banking system often makes these sensitive banking documents vulnerable to potential hacker attacks.

Take Bank of America as an example. According to the Wall Street Journal, the bank paid a $17 billion fine to the Department of Justice for mortgage loans in 2014, of which more than $9 billion was settled in cash.

Today, banks are beginning to take these issues more seriously and realize that blockchain technology has the potential to eliminate these multi-billion dollar financial problems. However, major financial institutions around the world are trying to deploy their own blockchain networks without considering that the security of blockchain networks is based on the protection of computing power.

“To use an analogy, the size of the city is the size of the blockchain network, and the height of the city walls represents the network computing power. Therefore, the larger the blockchain, the more computing power is required to maintain it. Bigger things are inherently more fragile and therefore require exponentially more resources to protect,” explained security and Bitcoin expert Pete Dushenski.

In the coming months, banks may switch their interest to the Bitcoin blockchain and rely on it to create distributed applications, transform the existing banking system and save themselves billions of dollars in potential fines.

Original article: http://www.newsbtc.com/2015/12/23/28131/
By Joseph Young
Compilation: Overnight porridge
Source (translation): Babbitt Information (http://www.8btc.com/save-banks)