Blockchain- A Technical Solution for the Reduction of Banking Frauds

Abstract

The occurrence of frauds and scams in the banking sector creates a hurdle for the economic growth and stability of a country. It raises a red flag indicating a critical failure in the banking system. Though central banks have adopted various measures to overcome this adversity, there is a need for a more systemized procedure and robust technical measures. To go deeper into this, five banking scams in India are studied. One of the significant areas for the origination of fraud lies in the corporate loan issuance process. A qualitative approach is considered for the analyses of five cases that came into light during 2017-2019, using the 5W2H tool. Interviews conducted with five bank managers of both private and public sector banks garnered insights into the vulnerable areas in the loan issuance process. The researchers identified that a weak control system in the banking environment is the main reason for the precipitation of fraud and propose a suitable blockchain technology that can be adopted in the corporate loan issuance process to strengthen the system.