The second problem related to the finance sector is the one related to the cross border payments. Most of the cross border payment processes are opaque and it takes a lot of time and cost for the transactions to execute. A solution to such a problem is a blockchain based solution with digital assets and smart contracts. digital assets will cut the operational as well as the capital compliance cost. Moreover, smart contracts will help parties to engage in financial agreements acting as a legal contract between all the parties. We can also create multiple currencies over the blockchain which can be exchanged between different banks.

The benefits of using such a solution will be higher speed and affordability which will be available for the cross border payments. Most persons versus engaging in the transferring of a huge amount of money between global locations takes a lot of time and cost, but employing blockchain will reduce the overheads. blockchain will also provide transparency and security for the complete process. As you are now trusting the cryptographic algorithms running behind the blockchain, instead of a central party like a bank. This solution will also reduce the economic risk because everything is immutable and stored for indefinite periods. issuing digital currencies over blockchain will also solve the cross border liquidity issues.

Let's visualize this use case with the help of a diagram. Let's take an example that user a and user B wish to conduct an interaction or transaction related to cross payment, the users are holding cryptographic keys assigned to them and related to the blockchain network, they are going to use the keys to sign the transaction. User a creates the transaction and broadcast it to the verifiable distributed network. The miners or verifiers validate the transaction and add it to the block. This block is then added to the chain, creating a permanent golden source of the transaction record. On the other end, user B can see this transaction and get the funds sent across by user a, the transaction between user a and user B will be completed in much faster and cost effective way compared to the traditional approach.