With the Nirav Modi fraud headlining the news, the question of security and accountability looms large over the banking sector. The Nirav Modi fraud brought into the spotlight, the fact that newer technologies such as block chaining can be utilized in the Indian banking sector to prevent such frauds in the future. Around Rs 61,260 crore worth of fraudulent cases have been reported in state-run banks alone.
The internal security measures of the banking sector have come into question with this case, as it was seen that Nirav Modi had the assistance of a former bank employee Gokulnath Shetty. This is where Blockchain can come into play. The blockchain is basically a digitally distributed ledger system that records an asset’s movement and ensures point-to-point tracking of information on transactions that can map its journey. No central entity has control over the system.
This is a decentralized system and hence it is more transparent than other methods of banking that are currently being used. An immutable log of the transactions is also kept, and the data is stored across the network. While Blockchain will not solve all the issues plaguing the banking sector it is a starting point and the banking industry must welcome the change and adapt to the technology as soon as they can, so as to prevent such events from occurring in the future