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lending practices. Traditional banks, as well as fintech stored on the blockchain, further streamline processes by
lenders, have adopted advanced algorithms and machine automating contract execution when predefined conditions
learning models to assess creditworthiness more efficiently. are met. This technology facilitates automatic payments,
This has led to the rise of alternative credit scoring, where improves contract transparency, and reduces the reliance
factors beyond traditional credit histories, such as utility bill on intermediaries. Additionally, blockchain-based digital
payments, social media behaviour, and transaction data, are identities are being explored to provide users with a secure
considered for evaluating creditworthiness. and verifiable identity, reducing the risk of identity theft and
improving Know Your Customer (KYC) processes.
Furthermore, peer-to-peer (P2P) lending platforms have
gained popularity as an alternative source of credit for Quantum Computing and Cryptography
individuals and small businesses. P2P lending connects
borrowers directly with individual lenders, bypassing As banks face the challenge of ensuring robust cybersecurity,
traditional banking intermediaries. These platforms facilitate the advent of quantum computing presents both
opportunities and threats. Quantum computing's immense
financial inclusion by providing credit access to borrowers
who may not meet the stringent criteria of traditional computational power has the potential to break current
cryptographic algorithms that underpin digital security.
banks.

However, the increased reliance on digital lending has also To address this concern, banks are exploring quantum-safe
raised concerns about responsible lending practices and cryptographic solutions that can withstand quantum attacks.
consumer protection. The RBI and other regulatory These post-quantum cryptographic algorithms aim to
authorities are closely monitoring the sector to ensure fair protect sensitive data even in the face of quantum
practices and prevent instances of predatory lending. computing capabilities.

Green Banking and Sustainable Finance Additionally, quantum computing holds promise for various
banking applications, such as optimizing portfolio
With growing concerns about climate change, there is an management, pricing complex financial derivatives, and
increasing focus on sustainable finance and green banking
improving fraud detection algorithms. Quantum computing
practices in India. Banks are incorporating environmental,
could lead to a range of applications such as analysing large
social, and governance (ESG) criteria into their lending areas of heterogenous data to make financial predictions
decisions and investment portfolios. The issuance of green and understand economic phenomena, analysis of financial
bonds and financing renewable energy projects are some
of the initiatives undertaken to promote sustainable markets, and the management of asset allocation and risk
development. management. As quantum computing technology advances,
banks will need to stay at the forefront of research and
Blockchain Applications in Banking development to leverage its potential benefits.
Blockchain technology has gained significant attention in the
banking sector due to its potential to enhance security, Biometric Authentication and Security
transparency, and efficiency in financial transactions. Biometric authentication is becoming increasingly prevalent
Blockchain is a decentralized and distributed ledger that in banking, providing a secure and convenient method for
records transactions across a network of computers, customer verification. Fingerprint recognition, facial
ensuring immutability and reducing the risk of fraud and recognition, and iris scanning are being used to replace
data manipulation. traditional passwords and PINs, enhancing the security of
digital transactions.
In the context of banking, blockchain is being explored for
various applications, including cross-border payments, trade Biometric authentication not only minimizes the risk of
finance, and identity management. Blockchain-based unauthorized access but also prevents identity theft and
platforms offer real-time settlement and remove the need phishing attacks. As biometric technologies become more
for intermediaries, reducing transaction costs and sophisticated and widely adopted, they will play a pivotal
settlement times. Smart contracts, a self-executing code role in ensuring a frictionless and secure banking experience.

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