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Blockchain and biometrics: The tech disrupting banking

As the banking industry changes at a rapid pace, one term is being used with increasing frequency — blockchain.

Put simply, blockchain refers to a tamper-proof, distributed digital ledger that records transactions.

Instead of different parties involved in a transaction keeping their own records of that transaction — which could potentially differ and cause confusion — blockchain creates one "master" record. This cannot be changed once a transaction has been recorded.

As technology giant IBM notes: "All parties must give consensus before a new transaction is added to the network."

Dirk Haubrich is head of consumer protection, financial innovation and payments at the European Banking Authority (EBA). He told CNBC: "We've looked at blockchain… in one particular use case, which was virtual currencies, four years ago."

At that time, the EBA had a "rather negative view," Haubrich explained. "But there are lots of other use cases that have been emerging since then, like trade finance and… clearing of payments."

This was "quite interesting," he added. "Many of the risks that we've identified at the time for virtual currencies probably don't arise for those use cases but we need to have a closer look, which we haven't done yet."

It could be argued that blockchain technology is still in its infancy, and that its potential is a long way from being fully realized.

PayPal's Mark Brant told CNBC that blockchain would continue to evolve, "but for it to become widely used there need to be scale use cases on either the consumer side or the merchant side or both."

"We'll continue to follow that and experiment with it and keep abreast of it, and continue to look to see whether there is a clear gap in the market that we can exploit with it," Brant, who is managing director at PayPal U.K., added.

While blockchain technology offers new ways of carrying out transactions, other innovations could help to boost the security of financial dealings.

One such development is the increasing use of biometrics in banking. Already, many of us use our fingerprints to unlock our smartphones, and there are a range of potential applications.

"There's voice biometrics, there's fingerprint biometrics, there's iris biometrics, I think there's going to be many more invented," Niall Cameron, global head of corporate and institutional digital at HSBC, said.

Cameron went on to say that biometrics was probably one of the most important areas of new technology needed by the industry.

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