Blockchain Revolution: Speed Isn't Everything in Financial Settlements

Blockchain & Smart Contracts: The True Future of 24/7 Financial Settlement The traditional financial industry's obsession with speed has led to a misconception that faster is always better. However, experts argue that the real innovation lies not in making existing systems go faster but in fundamentally changing them. According to Aishwary Gupta, a representative from Polygon Labs, "Outdated financial systems only appear fast but are inefficient, while blockchain and smart contracts create truly automated, real-time processes that enable new business models." The current batch processing systems, correspondent banking relationships, and siloed databases were state-of-the-art when telex machines dominated the landscape. However, these legacy systems have become a patchwork of outdated technology, unable to keep pace with modern financial demands. Gupta continued, "Making a horse-drawn carriage go faster doesn't turn it into a car. The problem with traditional financial settlement is that it was built for a world that no longer exists." The limitations of traditional financial infrastructure are evident in its inefficiencies and lack of transparency. Batch processing systems, which process transactions in batches rather than individually, can lead to delays and errors. Correspondent banking relationships, which require multiple banks to facilitate international transactions, add complexity and increase costs. Siloed databases, which store data in isolated systems, hinder the sharing of information between institutions, making it difficult to track transactions and identify potential issues. The introduction of blockchain technology has revolutionized financial settlement by providing a secure, transparent, and automated platform for transactions. Smart contracts, self-executing contracts with the terms of the agreement written directly into lines of code, have further streamlined the process. Gupta emphasized, "Blockchain and smart contracts create truly automated, real-time processes that enable new business models." The implications of this shift are far-reaching. With blockchain-based financial settlement, transactions can be processed in seconds rather than days or weeks. This not only reduces costs but also increases efficiency and accuracy. Moreover, the transparency provided by blockchain technology allows for greater accountability and trust within the financial system. As the adoption of blockchain and smart contracts continues to grow, experts predict a significant impact on traditional financial institutions. "The future of financial settlement isn't faster; it's fundamentally different," Gupta concluded. Current Status and Next Developments The use of blockchain and smart contracts in financial settlement is already gaining traction. Several major banks and financial institutions have begun exploring the technology to improve their processes. In 2025, a consortium of leading banks launched a pilot program using blockchain-based settlement for cross-border transactions. The results showed significant reductions in processing time and costs. As the industry continues to evolve, experts predict that blockchain and smart contracts will become an essential part of financial infrastructure. With its potential to revolutionize financial settlement, this technology is poised to transform the way we think about money and finance. *Reporting by Coindesk.*