There is a clear shift of focus, from a centralized technical infrastructure to distributed infrastructure platforms. This change is responsible for the next generation business models in payments, digital banking, and financial transaction technologies. One of the technologies riding on distributed architecture is Block-chain technology. The Blockchain is a term which is being buzzed across the network. It is being mentioned virtually by all research firms as a destructive technology.

As a technology, it is reshaping the industry verticals from various facets. It was originally created as a method of tracking Bit- coin transactions. Bitcoin is a Block-chain-enabled currency and a peer-to-peer electronic cash system which was designed for online payments without going through a financial institution. Bitcoin has enabled a virtual currency system without any trusted parties and without pre-assumed identities among the participants.

Blockchain has the potential to transform the managing principles of money transfer systems. Blockchain, as a technology, is designed to be the foundation of a new set of applications that involve transaction and interactions recorded in the public and private domains. These transactions are recorded in an encrypted and distributed database. Distributed ledgers are built on cryptographic tools supported by distributed consensus mechanism.

This was a significant innovation for records management. The distributed ledger is expressed as a tamper-evident electronic ledger for all practical purposes. The electronic ledger is shared within a network of computers. The digital ledger is accessible across the WAN and is not bound to be kept in a single place. The ledger holds a record of transactions between the participating entities. The set of transactions, often called as transaction collections, are stored in the data segment of a blockchain providing a meaning to the block component of the Blockchain. The blocks in turn are stored chronologically.

Blockchain as a technology was designed for sharing transaction information across interested parties. The technology holds the potential for all participants in a business network to share a system of transaction records. It is expected to be used in a variety of industries and for a variety of reasons. One

such domain vertical is the banking and finance vertical. Some of the interesting and novel applications are discussed in brief here.

From a banking and financial do-main point of view, Blockchain reduces the cost of establishing trust among participating entities. Trust is an essential element in all financial trans-actions. The current digital economy is built around a trusted authority as a third party.

The role of a trusted third party is played by banks. All online transactions rely on trusting someone to tell us the truth. Blockchain has the capability to redefine the digital realm with dispersed consensus mechanism, where all online transactions from various time slots, concerning digital assets can be corroborated at any time in the future. The distributed ledgers in a public/private domain are driven by smart contracts eliminating third party interventions and bringing the cost of trust and transparency.

Conventionally, banking and financial transactions were recorded in ledgers which later moved to centralized electronic ledgers. Reconciliation was time consuming, and an example for this is Intra-bank cross-border payments. Different parties work with copies of the electronic ledger and transact through messages. The essential strength of Blockchain is the elimination of duplicate data with an improved settlement. Blockchain saves on reconciliation cost between banks and prevents losses due to documentary frauds. It can be used to facilitate payments and settlements in a range of different circumstances, offering near real-time transfer of funds and settlement time reduction.

Banks are conscious of data quality. On a conventional platform, transactional data resides in duplicate locations. Interested parties with malicious motive move in for altering the stored data. This can be avoided with Blockchain. A mutual contract struck between any set of transacting entities in the blockchain network is generally termed as a transaction. Blockchain helps in managing the transactional data quality. With Block-chain, the transactions get validated and distributed based on smart con-tracts.

They are fragments of software that spread blockchains' value from a record of financial operations entries to automatically applying terms of multi-party agreements. Each transaction or contract between two or more members in the network requires verification or validation by the net-work. Validated generic Blockchain transactions are called smart con- tracts, which are embedded in Block-chain networks. These are commonly agreed on terms between parties which automatically execute once conditions are met.

Smart contracts built on electronic ledgers open up a new dimension of financial supply chain transactions. This is another interesting domain of the application area. The smart contracts can be useful for tracking the letters of credit, or bills of lading, along the financial supply chain downstream and up-stream. Bitcoin technology helps in increased reporting of financial sup-ply chain transactional data.

The conventional banking processes are usually linear, similar to the assembly line of the manufacturing industry; for example, the maker-checker/cross check/approval processes. The purpose of the maker-checker process is to help the banks and financial Institutions to emphasize control leading to decisions. This hierarchical decision process leads to delays in decision-making, leading to longer processing time. Blockchain simplifies the decision making process with distributed ledgers.

The Blockchain is promising. Transferring to a Blockchain system would definitely speed up services like worldwide payments, equity clearing, trade finance, and loans.