Investigating the role of blockchain technology in enhancing data integrity and security for interbank transactions

Abstract

As digital interbank transaction systems gather more business and services, it increasingly requires providing better verification system for data integrity and security. These challenges are addressed with a potential solution through, blockchain technology, with its inherent characteristics of decentralization, immutability, and transparency. Therefore, this study explores how the blockchain technology can improve data reliability and security for interbank transactions through solutions: removal of single point of failure, prevention from unauthorized data tampering and provides realtime auditing. The study compares core blockchain attributes including consensus protocols, cryptographic hashing and smart contracts with interbank transaction processes. Moreover, the paper discusses challenges in integration, scalability, regulatory compliance, and interoperability with current bank infrastructure. The findings emphasize that the process can help in cutting down on transaction fraud, decreasing the overhead needed to carry out transactions, improving operational transparency, and ensuring the information used in transactions is accurate. Lastly, the paper ends by considering how to best transition to blockchain across interbank systems, suggesting that the technology of blockchain will revolutionize the way in which banks collaborate and as such should be at the heart of any financial infrastructure in the future, despite the potential issues surrounding its implementation.