There is no denying the financial system as we know it is slowly starting to fall apart. Banks are struggling to keep up with the growing demand for convenient services, and internal errors are alienating customers from their brand. Barclays, one of the largest banks in the world, mistakenly put out a fraud alert against one of its customers, preventing him from taking out credit, secure a mobile phone contract, or even move banks.

Also read: Russia Launches Own Credit Rating Agency – Door Is Wide Open For Bitcoin

Internal Barclays Error Has Major Consequences

In most cases, the tight-knit relationship between major banks and other companies is a positive thing for all parties involved. Providing a credit history of certain consumers can prevent any financial harm from coming to companies such as mobile service providers. But there are a fair few downsides to this type of business as well.

For example, whenever someone receives a “black mark” regarding credit rating, the customer will not be notified in any way. Companies and financial institutions do not have an obligation to notify individuals regarding these decisions, although the implications can have major repercussions.

Something as mundane as cashing a cheque in a foreign currency – even though it is in the customer’s name – can lead to a fraud alert being put against that person. While the chances of this happening are slim, such an erroneous mark can destroy a person’s credit rating forever.

Opening a new bank account with a different bank will be impossible as well, due to this internal “marking” system financial institutions use. While this is an issue that can always be rectified when appealing to the bank itself, this mark is not something that will be erased that easily. In fact, when using various companies to check out one’s credit score, chances are they will display it as “excellent”, making the consumer none the wiser.

Blockchain Technology To Provide Additional Transparency

It should come as no surprise to find out most financial institutions are keeping a close eye on blockchain technology

Bitcoin is a viable alternative to traditional finance as we know it. A transparent ledger that displays any internal remarks banks may have about their customers would go a long way. Additionally, the blockchain powering Bitcoin’s network can be used to transfer value all over the world in a matter of seconds.

Source: Telegraph UK

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