Fraud – a lack of transparency that enables it – is a growing concern for businesses today, especially when more and more businesses are taking the digital landscape.
In a list published by Risk.net, fraud was among the top 10 concerns for businesses and was preventing their business from reaching its full potential.
While businesses are concerned about fraudulent activity, there has been a new technology that holds the potential to offer a solution. Yes, you guessed it right, we are talking about Blockchain technology.
Blockchain is a shred ledger that is decentralized in nature and free from tampering. Even if someone enters the network, they can’t enter deep without anyone noticing. This ensures that fraudulent activity is stopped before any serious damage is done.
Seeking to capitalize on the benefits Blockchain has to offer, we will see how Blockchain technology can help businesses put an end to fraud in financial transactions.
Preventing Fraud In Finance
Financial transactions in business are always followed by complex processes in business. These complex processes are what lead to financial fraud in the business. As to why these business financial business transactions are complex, there can be many factors.
For instance –
- It can be different in currency denomination.
- It can be because of collateral.
- Or third-party mediation.
Multiple-step processes, especially those that need human involvement, are always at risk of being targeted.
However, with Blockchain, information is shared in real time, and the distributed ledger can be updated when every part of the network agrees. This can reduce the extent of damage caused by any fraudulent activity.
If you want to know more about how Blockchain technology will help reduce fraudulent activity in the financial transaction industry.
Preventing Identity Fraud
Last year, identity fraud cost the nation almost $16 billion. In addition, the treaty of identity fraud has affected many credit card companies, which has made consumers and financial institutions cautious about their digital payments.
Despite trying hard to bring in smart cards and verification before making transactions, the fraudulent activity has continued to increase.
This is where Blockchain comes with a technology that can offer a secure network to store anyone’s identity. Blockchain networks offer a place to store all your sensitive information. The information can only be accessed by authoritative parties. And only known parties can participate in making transactions.
This technology is being researched in Canada. SecureKey technologies are currently working on a new digital identity management system that is based on Blockchain. This technology will allow the consumer to control what information they want to share, while the organization can identify and validate a customer’s identity.
Preventing Fraud In Supply Chain
Even if supply chain fraud is a problem, financial transaction fraud receives greater media attention. This is due to the fact that the supply chain is intricate and includes human points where mistakes may occur. Sadly, this means there are numerous security gaps that hackers may exploit.
Blockchain contributes to reducing and even preventing supply chain fraud. A distributed digital ledger is the foundation of blockchain technology. As a result, network manipulation is challenging. Even if there has been any fraudulent activity on the Blockchain network, it can be easily detected.
Traditional paper tracking and manual tracking can leave the supply chain vulnerable to inaccuracies. However, with Blockchain, you can keep track of the products in real time – a process that used to take days if done manually.
Can Blockchain Eliminate All Fraud?
No, Blockchain doesn’t guarantee 100% protection from any fraudulent activity. In fact, there have been cases where despite having Blockchain security, fraud has taken place.
However, those successful attempts were only on the top layer of services and only out of several hundred attempts.
A Blockchain network is built on the notion of a decentralized network. This makes it impossible for any attacks to penetrate deeper without anyone noticing it.
This is why it is important for the business to take help from Blockchain security and add multiple eyes on the network to prevent any fraudulent activity.