Kenyan Banks Explore Blockchain Technology Use But Seek Authorization First
Banks in the East African nation of Kenya are pursuing supervisory authorization to utilize blockchain technology in the distribution of payments. The financial institutions also want to come up with models for credit scoring for the sake of rating prospective borrowers.
In as much as there are several advantages of using the innovative technology, there are adverse risks just in case it fails or should it be abused by dishonest people. In a report released by the Central Bank of Kenya, there is the necessity to make sure that vigorous supervisions are set in place to ensure that the dangers as well as prospects related to the ground-breaking technologies are well-adjusted.
Fall in revenue In financial sector
The appeal to adopt the use of the distributed-ledger technology comes at a time when there is a fall in revenue in the financial sector. This is after the country embraced legislation to limit interest rates in 2016, followed by uncertainty that characterized the general elections that took place a year after.
As a result, profitability in the banking sector fell by approximately 9% to $1.3 billion in 2017, with the gross loans and advances dropping by 5.7% to Kshs. 2.16 billion. Additionally, the ratio of bad debts rose to 12%, when compared with 9.3% in 2016. This is in line with a report released by the nation’s Central Bank.
Apparently, the Central Bank also asserted that it is yet to recognize virtual assets, which, according to its leadership, is largely ‘concomitant with obscurity and are generally used by felons’.
The electoral agency to use blockchain technology
Apart from the banking industry, Kenya’s electoral agency also intends to embrace blockchain technology in order to release real-time results. This is done in an effort to improve the truthfulness of the electoral process.
The nation has resorted to use the distributed-ledger technology as a way of verifying and recording virtual asset transactions. This will go a long way in boosting transparency, as well as lessening the acuities of imperviousness and also make it possible for presidential candidates to safely have access to results from the electoral agency.