Blockchain technology is known for its role in financial services. More than monetary institutions, it is bringing convenience to regular people. However, the finance sector needs to learn blockchain in depth to achieve its maximum potential regarding Financial services. This is why the need for a blockchain professional in institutions is on the rise as well. This article will look into the significant benefits that blockchain adoption can provide in mortgage lending. Hence let us start with the topic:
Table of contents
- Why do we need blockchain in the space of mortgages?
- Blockchain benefits for mortgage lending
- Transparency in Audit Trail:
- Removes the accumulation of documentation
- Faster verification process:
- Access fee reduction
- Things to consider while adopting blockchain technology in mortgage lending:
- Blockchain awareness program
- Establishment of potential risk and management system
- Adoption of a holistic approach
- Engagement of stakeholder
- A robust cyber security
- Closing thoughts
Why do we need blockchain in the space of mortgages?
The existing process of mortgage lending is efficient but time-consuming. Aside from this, it needs a series of document confirmation from external parties. Further, with the procedure, it becomes more costly. Hence bringing mortgages onto the blockchain, a distributed ledger technology can revolutionize the entire system. Also, so we can do that, blockchain can make the mortgage lending process much cheaper. As per a 2018 report by Moody’s, blockchain technology can save more than a billion dollars on the collective mortgage operational expenditure in the US mortgage market alone.
The blockchain professional says that the creation of open-source blockchains by the government would be a windfall for mortgage proceedings. Further, it will streamline easy access to most of the monetary services, including the property-linked public. Hence, introducing an upgraded level of productivity to the mortgage area.
Let us look through some of the major benefits of bringing blockchain onto mortgages:
Blockchain Benefits For Mortgage Lending
Transparency in Audit Trail:
Blockchain offers a transparent audit trail that is secure in nature. Every information that the system adds to its chain is open for everyone to inspect. Hence members can recognize any fraud or manipulation right away. Moreover, there are some restrictions above such data that perfectly maintain privacy. Every block in the system is permanent, and anyone can revisit it in the future when in need.
To know how it works, interested individuals can learn blockchain technology through courses available on the web.
Removes the accumulation of documentation
The technology can streamline faster verification of document alteration, eventually reducing the need for data accumulation. It eradicates the need to store long-term documentation physically.
Faster verification process
The verification process with blockchain for mortgages can be much faster as every party will use the same document.
Making every confirmation happen quickly and transparently.
Access fee reduction
No central authority or intermediaries like credit agencies or negotiators can claim the information stored over the blockchain network. Thus, you don’t need to pay any extra fee to access your information on the web.
These are some of the significant benefits of blockchain in the finance sector; however, you can check out the blockchain council to learn more. Here, you’ll find multiple relevant and exciting topics on DLT.
Things to consider while adopting blockchain technology in mortgage lending:
Blockchain awareness program
While a financial institution decides to adopt blockchain technology, they need to ensure that their staff gets the ins and outs of its functionality. Hence institutions need to run training programs for employees to make them aware of its benefits and usage.
This is important as most people consider blockchain similar to cryptocurrency. Note that both are different as cryptocurrency is a transactional asset while blockchain is a technology that makes it possible. In Fact, blockchain has various applications other than transacting cryptocurrencies, especially in securing online storage of information.
Establishment of potential risk and management system
Naturally, blockchain comprises a distributed architecture. Hence, establishing a solid risk and management system becomes a critical need. This will further prevent institutions from occurrence of frauds and cheats.
Such a system can depict the laws and regulations concerning data privacy and access rights. In addition to this, financial institutions will formulate policies and procedures to deter the chances of risk arising on the network.
Adoption of a holistic approach
As financial institutions involve a series of systems and legacies, it is crucial to adopt a holistic approach. Furthermore, this practice will standardize the design of nodes and blocks, the processes consistent and improved.
The outline for adoption must include:
Enhancement and cleaning of procedures.
Establishing the proper design framework.
Potentially using the IT topography and existing infrastructure.
Engagement of stakeholder
To efficiently add blockchain, institutions need to boost the engagement of stakeholders with the technology. Moreover, the involvement of many stakeholders can offer all-around support to the adoption of new financial services.
A robust cyber security
As we know that blockchain is built on a shared network, security vulnerabilities can be very dangerous. Furthermore, poor interface security between blockchain and traditional systems, not-so-strong encryption, and mismanagement of public and private keys can invite cyber attackers. Hence the need for an active, responsive strategy to cyber attacks is a must on the network.
Distributed ledger technology has the profound potential to offer more robust security in the space of mortgage lending. Eventually, the mass adoption of shared technology by Financial institutions will effectively reduce the overall mortgage cost. Furthermore, streamlining safe exchanges within a matter of seconds. However, financial authorities need to learn blockchain technology, its concepts, and its uses for financial services to leverage it better.
Take a look at the BLOCKCHAIN COUNCIL, a platform that provides updated news and information on the blockchain. Also, you can opt for various certification programs based on cryptocurrency and blockchain on this platform. Furthermore, the platform offers the guidance and teachings of the best-known blockchain professionals.