Revolutionizing Financial Risk Management: Blockchain's Role in Transforming Global Banking Systems
DOI:
https://doi.org/10.61978/moneta.v2i4.378Keywords:
Blockchain, Financial Risk Management, Global Banking, Digital Transformation, Regulatory ComplianceAbstract
The rapid advancement of digital technologies has revolutionized global banking, with blockchain technology emerging as a transformative tool for financial risk management. Its decentralized, immutable, and transparent framework offers fraud prevention, operational risk mitigation, and enhanced regulatory compliance benefits. However, its role in addressing pandemic-induced uncertainties and complex risk management challenges remains insufficiently explored. This study aims to analyze blockchain's transformative role in financial risk management within global banking, focusing on its adoption during and after the COVID-19 pandemic. Method: Using a Systematic Literature Review (SLR) methodology, the research synthesizes findings from peer-reviewed articles and industry reports published between 2018 and 2024.The results reveal that blockchain reduces fraud risks through immutable records, improves operational efficiency via smart contracts, and enhances compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. It also strengthens resilience by mitigating risks from central system failures and enabling real-time monitoring of financial transactions. Despite these advantages, challenges like scalability issues and fragmented global regulations limit its adoption. During the pandemic, blockchain demonstrated its crisis-resilient potential by enabling secure online transactions and real-time fraud detection. The study concludes that blockchain offers transformative benefits for financial risk management. However, its broader adoption requires strategic interventions, such as unified regulatory frameworks, scalability solutions, and sandbox environments to foster innovation. Addressing these challenges could unlock blockchain’s full potential in reshaping global banking with enhanced transparency.
References
Adeoye, O. B., Addy, W. A., Odeyemi, O., Okoye, C. C., Ofodile, O. C., Oyewole, A. T., & Ololade, Y. J. (2024). Fintech, Taxation, And Regulatory Compliance: Navigating The New Financial Landscape Finance &. Accounting Research Journal P-ISSN, 6(ue 3), 2633–2708. https://doi.org/10.51594/farj.v6i3.858 DOI: https://doi.org/10.51594/farj.v6i3.858
Al-Ansi, A. M., Garad, A., & Jaboob, M. (2024). Unraveling the complexities of financial innovation and digital transformation within banking systems. Multidisciplinary Reviews, 7(11), 2024265. https://doi.org/10.31893/multirev.2024265 DOI: https://doi.org/10.31893/multirev.2024265
Bhuana, K. W. (2024). The Role of Blockchain in Indonesia’s Post-COVID-19 Digital Economy. 11th Konferensi Ilmiah Akuntansi. Access Article.
Chowdhury, S., & Rodriguez-Espindola, O. (2023). Prasanta Dey,· Pawan Budhwar(2023) Blockchain technology adoption for managing risks in operations and supply chain management: evidence from the UK. Annals of Operations Research, 327(539–574), 1. https://doi.org/10.1007/s10479-021-04487- DOI: https://doi.org/10.1007/s10479-021-04487-1
Faizin, M., & Rosalina, K. E. (2024). Crafting a Sharia fintech development strategy in Indonesia: Leveraging SWOT analysis for sustainable growth. El Barka: Journal of Islamic Economics and Business, 7(1), 12–25. https://jurnal.iainponorogo.ac.id/index.php/elbarka/article/view/7415
Gao, Y., Xu, P., Yu, H., & Xu, X. (2024). A novel blockchain-based system for improving information integrity in building projects from the perspective of building energy performance. Environmental Impact Assessment Review, 109. https://doi.org/10.1016/j.eiar.2024.107637 DOI: https://doi.org/10.1016/j.eiar.2024.107637
Grima, S., Kizilkaya, M., Sood, K., & and, M. E. (2021). The Perceived Effectiveness of Blockchain for Digital Operational Risk Resilience in the European Union Insurance Market Sector J. Risk Financial Manag, 14(8), 363. https://doi.org/10.3390/jrfm14080363 DOI: https://doi.org/10.3390/jrfm14080363
Hamdan, A., Alareeni, B., & Khamis, R. (2024). Digital Technology and Changing Roles in Managerial and Financial Accounting. Emerald Insight. Read More. DOI: https://doi.org/10.1108/S1479-3512202436
Irfan, M., Kadry, S., & Khan, H. U. (2023). Fintech Applications in Islamic Finance: AI, Machine Learning, and Blockchain Techniques. Google Books. Read More. DOI: https://doi.org/10.4018/979-8-3693-1038-0
Joshi, P., Tewari, V., Kumar, S., & Singh, A. (2023). Blockchain technology for sustainable development: a systematic literature review. Journal of Global Operations and Strategic Sourcing, 16(3), 683–717. https://doi.org/10.1108/JGOSS-06-2022-0054 DOI: https://doi.org/10.1108/JGOSS-06-2022-0054
Mansour, N., & Bujosa, L. (2024). Islamic Finance: New Trends in Law and Regulation. Google Books. Read More. DOI: https://doi.org/10.1007/978-3-031-48770-5
Milkau, U. (2021). Operational resilience as a new concept and extension of operational risk management. Journal of Risk Management in Financial Institutions, 14 / Number 4, 408–425 18. DOI: https://doi.org/10.69554/QULW1579
Mishra, R., Singh, R. K., Kumar, S., Mangla, S. K., & Kumar, V. (2023). ) Critical success factors of Blockchain technology adoption for sustainable and resilient operations in the banking industry during an uncertain business environment Electronic Commerce Research https://doi.org/10.1007/s10660-023-09707-Published. DOI: https://doi.org/10.1007/s10660-023-09707-3
Odeyemi, T. (2024). Addressing Cybersecurity Challenges in Blockchain Ecosystems. Journal of Digital Security.
Pagano, A. J., Romagnoli, F., & Vannucci, E. (2021). Implementation of Blockchain Technology in Insurance Contracts Against Natural Hazards: A Methodological Multi-Disciplinary Approach Online: Dec 13 (pp. 211 – 229). https://doi.org/10.2478/rtuect-2019-0091 DOI: https://doi.org/10.2478/rtuect-2019-0091
Rahman, A., Kundu, D., Debnath, T., Rahman, M., & Islam, M. J. (2024). Blockchain-based AI Methods for Managing Industrial IoT: Recent Developments. Integration Challenges and Opportunities, 2405(12550v3).
Rauniyar, K., Wu, X., Gupta, S., Modgil, S., & Sousa Jabbour, A. B. L. (2022). Risk management of supply chains in the digital transformation era: contribution and challenges of blockchain technology Industrial Management & Data Systems. DOI: https://doi.org/10.1108/IMDS-04-2021-0235
Rousta, R. (2024). Standardization in Blockchain Protocols: A Roadmap for Financial Sector Integration. Global Finance Review.
Searcy, I. P. I. M. A. R. · I. E. · C. (2023). Leveraging blockchain in response to a pandemic through disaster risk management: an IF MCDM framework. Operations Management Research, 16, 642–667. https://doi.org/10.1007/s12063-022-00340-1 DOI: https://doi.org/10.1007/s12063-022-00340-1
Sharma, M., Joshi, S., Luthra, S., & Kumar, A. (2022). Managing disruptions and risks amidst COVID 19 outbreaks: role of blockchain technology in developing resilient food supply Operations Management Research (Vol. 15, pp. 268–281). https://doi.org/10.1007/s12063-021-00198-9 DOI: https://doi.org/10.1007/s12063-021-00198-9
Singh, P., Sagar, S., Singh, S., Alshahrani, H. M., Getahun, M., & Soufiene, B. O. (2024). Blockchain-enabled verification of medical records using soul-bound tokens and cloud computing. Scientific Reports, 14(1). https://doi.org/10.1038/s41598-024-75708-3 DOI: https://doi.org/10.1038/s41598-024-75708-3
Wakagwi, M. W., & Mose, T. (2024). Blockchain Technology Adoption And Performance Of Commercial Banks In Nairobi City County. Kenya Int Journal of Social Sciences Management and Entrepreneurship, 8(4), 198–210.
Yadav, R. (2024). Navigating Legal Ambiguities in Blockchain for Cross-Border Finance. Asian Journal of Financial Technology.
Yerram, S. R., Goda, D. R., Mahadasa, R., & Dekkati, S. (2021). The Role of Blockchain Technology in Enhancing Financial Security Amidst Digital Transformation. Asian Business Review, 11(3), 125–134. https://doi.org/10.18034/abr.v11i3.694 DOI: https://doi.org/10.18034/abr.v11i3.694
Yudha, I. P., Rahadi, R. A., & Noveria, A. (2024). Bitcoin adoption strategy as a company asset in Indonesia. The Asian Institute of Research: Economics and Business Quarterly Reviews, 15(3), 55–70. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4891558 DOI: https://doi.org/10.2139/ssrn.4891558
