Blockchain framework and its Applications in the context of the Egyptian Banking Sector

In the past, the Egyptian banking sector has faced many issues due to instability in the politics, financial system and economy. However, in recent years, the Egyptian banking sector has started experiencing improvement. In recent years the Egyptian banking system performance was way better than other emerging economies. The Egyptian banking system comprises of 40 commercial and non-commercial banks. It includes both private & public sector banks. The central bank of Egypt (CBE) is the main governing body. All the banks in Egypt are supervised by the Central bank of Egypt. Banque Du Caire, National Bank of Egypt and Bank Misr are the largest bank in Egypt, having 40% market share of the banking sector.

In order to analyze the application of blockchain framework in the Egyptian banking system, it is important to understand the Egyptian banking sector critically and what challenges the Egyptian banking sector faces. The issues which the Egyptian banking sector have faced include inflationary trend, irregularities in the banking system, frauds, corruption and disciplinary issues. The fluctuation in the interest rate and unsuccessive government policies are some of the major issues which EBS faces. The blockchain technology has immerged as an evolutionary method of performing transactions. However, implementing blockchain in the Egyptian banking sector would require a complete transformation of the traditional banking system of Egypt; otherwise, blockchain will unable to provide maximum benefit.

Problem Statement of Blockchain framework and its Applications in the context of the Egyptian Banking Sector

Blockchain technology has the potential to transform banking and financial services around the world. However, in the case of Egypt, it cannot provide much benefit because the current infrastructure of the Egyptian banking system lacks the technology which is required for implementing the blockchain. Furthermore, in the past, the cryptocurrency was banned in the country, and Egypt has not tested this technology within its country, and there is no data or evidence that suggest the success of blockchain in Egypt banking sector (Mohamed and Ali).

Significance of the Research of Blockchain framework and its Applications in the context of the Egyptian Banking Sector

The technology is becoming advance day by day, and for the banking sector, it is highly important to become updated with the latest technology so that the customers can get the best services. Blockchain technology has huge potential for improving the traditional banking system; therefore, it is important to investigate how blockchain technology can be implemented. In simple word, this research study is highly important because it will provide plenty of information regarding this technology furthermore the research will tell what steps should be taken to implement this technology in the Egyptian banking sector.

Discussion of Blockchain framework and its Applications in the context of the Egyptian Banking Sector

In the banking industry, the blockchain technology can improve the way how banks perform their functions. If the banking industry adopted the blockchain technology than not only the payment process will become faster but also the accuracy of the transaction will also increase up to a lot of extents. The processing cost of transactions will also reduce after implanting the blockchain technology. However, for implementing the blockchain technology, a global network & necessary infrastructure will be required which developing countries like Egypt does not currently have (Lewis).

The blockchain technology improves the security of the data because there are many copies of the ledger, and it is not possible to hack each and every ledger which exist in different locations. The key advantage of blockchain technology is that the data is distributed. It means that the data is present in different devices and in case of any failure, the chances of losing data are quite less. This also makes the data hack-proof because hackers cannot hack the data that is present in thousands of devices (Guo and Liang).

The manipulation of data is highly difficult in blockchain technology because once the data is registered in the blockchain, it is highly difficult to remove the data. It means that this technology is quite reliable for storing financial information because it will remain safe from manipulation or hacking. In the traditional banking system, the chances of hacking are higher, but with blockchain technology, this can be controlled up to a lot of extents. it can be seen that there are many advantages of blockchain technology which can help the banking system to grow in the future. However, there are many drawbacks as well that  must be considered while implementing this technology

The first major drawback of blockchain technology is the modification of the data. Although modification of data is one of the major advantages of blockchain technology, sometimes the data needs to be modified due to various reasons. For instance, if someone registers the data in the blockchain, which contain unconditional error than changing such data is difficult, which can cause a problem for many individuals. On the other hand, the blockchain is not completely protected from attacks. In the past, the blockchain has experienced attacks (Winder).

Conclusion on Blockchain framework and its Applications in the context of the Egyptian Banking Sector

If all the above discussion is summarized than it can be said that the Egyptian banking sector has faced, including inflationary trend, irregularities in the banking system, frauds, corruption and disciplinary issues. Blockchain technology has the potential to improve the Egyptian banking sector further; however, currently, the infrastructure which is required for implementing the Blockchain does not exist in Egypt. Therefore in order to take full advantage from this technology, the Egyptian banking sector would have to change its overall technology infrastructure.

References of Blockchain framework and its Applications in the context of the Egyptian Banking Sector

Guo, Ye and Chen Liang. "Blockchain application and outlook in the banking industry." (2016): 1-12.

Lewis, Antony. The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them. Mango Media Inc, 2018.

Mohamed, Hazik and Hassnian Ali. Blockchain, Fintech, and Islamic Finance: Building the Future in the New Islamic Digital Economy. Walter de Gruyter GmbH & Co KG, 2018.

Winder, Davey. (Updated) 2 Billion Unencrypted Records Leaked In Marketing Data Breach --What To Do Next. 2019. <https://www.forbes.com/sites/daveywinder/2019/03/10/2-billion-unencrypted-records-leaked-in-marketing-data-breach-what-happened-and-what-to-do-next/#657d90d16b0d>.