An analysis of adoption of blockchain technology in the private banking sector of Bangladesh

Abstract

Blockchain is a key digital technique for ensuring the transparency, speed and immutability of different banking transactions. The private banking sector of Bangladesh has started to adopt the blockchain technology in its banking service management to keep it compatible in the world of virtual transaction. A new technology should adopt robustly for ensuring scale of economies in scope and scalability to get designated efficiency and effective over the existing technology. The study investigates the adoption of blockchain technology in four commercial private banks of Bangladesh. It is a qualitative study for which data is collected mainly from secondary sources such as newspaper and journal articles, press release and un-structured interviews with the relevant bank officials. In this study it is found that the blockchain technology is adopted in a limited scale applying only for two banking services, Letter of Credit (LC) settlement and remittance. Though the scope and scalability of this technology adoption is still insignificant, the efficiency level is high in terms of streamlining processes, reducing duplicity, increasing transparency and trust, eliminating ambiguities and discrepancies, enhancing security, reducing paper works, saving costs and time, and providing services in real-time. The clients of the services rendered from the blockchain platform of the banks under the study expressed their ecstatic satisfaction about the service quality. However, the large scale adoption of blockchain technology needs to overcome the challenges of growing network, less collaboration, low comprehensiveness, absence of sound regulatory framework and inadequate skilled human resources. If the banking sector can mitigate these challenges, the blockchain technology will become the ‘future technology of banking services’.