Current Volume 9
Abstract
Blockchain technology is rapidly transforming financial services by enabling decentralized, transparent, and secure transaction frameworks. In credit and loan systems, traditional processes often suffer from inefficiencies such as lengthy approval times, high operational costs, susceptibility to fraud, and limited transparency. Blockchain-based models offer a promising solution by automating key aspects of credit evaluation, loan origination, disbursement, and repayment through smart contracts and distributed ledger technology. This review explores the application of blockchain to automate credit and loan systems within financial institutions, highlighting its potential to streamline workflows, enhance security, and improve accessibility. The use of smart contracts enables predefined rules and conditions to execute automatically without the need for intermediaries, reducing manual errors and processing delays. Blockchain’s immutable ledger ensures transparent and auditable records, minimizing risks related to fraud and manipulation. Additionally, tokenization of assets and loans allows for greater liquidity and flexibility in credit markets. Integration challenges with existing financial infrastructure and regulatory frameworks are also discussed, emphasizing the need for hybrid solutions and legal clarity. Case studies of blockchain adoption in financial institutions illustrate improvements in operational efficiency, cost reduction, and customer experience. However, challenges remain, including scalability issues, regulatory compliance, and user acceptance. Emerging trends such as Layer 2 scaling solutions and combining blockchain with artificial intelligence for enhanced credit risk assessment present opportunities for further innovation. This review concludes that blockchain-based models hold significant promise for revolutionizing credit and loan system automation by fostering transparency, speed, and inclusivity. It calls for collaborative efforts among financial institutions, regulators, and technology developers to address existing challenges and develop scalable, compliant solutions. By leveraging blockchain’s unique capabilities, financial institutions can create more efficient, secure, and accessible credit ecosystems that better serve the evolving needs of global markets.
Keywords
Blockchain-based, Models, Credit, Loan system, Automation, Financial institutions
Citations
IRE Journals:
Ayodeji Ajuwon , Omoniyi Onifade , Tolulope Joyce Oladuji , Abiola Oyeronke Akintobi
"Blockchain-Based Models for Credit and Loan System Automation in Financial Institutions" Iconic Research And Engineering Journals Volume 3 Issue 10 2020 Page 364-381
IEEE:
Ayodeji Ajuwon , Omoniyi Onifade , Tolulope Joyce Oladuji , Abiola Oyeronke Akintobi
"Blockchain-Based Models for Credit and Loan System Automation in Financial Institutions" Iconic Research And Engineering Journals, 3(10)
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IRE Journals is an open access online journals established with an aim to publish high quality of research work in various diciplines. We have more than 6 years in publications. Over 2500+ papers already published.
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