Blockchain-Driven Cybersecurity, Financial Transparency, and Risk Governance in Banking, Insurance, and SME-Centered Supply Chain Finance

Abstract

The accelerating digitalization of banking, insurance, and supply chain finance has fundamentally reshaped how economic value is created, transferred, and protected. While digital platforms have increased efficiency, speed, and inclusion, they have simultaneously amplified systemic vulnerabilities related to cybersecurity breaches, data opacity, fraud, and asymmetric risk distribution—particularly affecting small and medium-sized enterprises (SMEs). Blockchain technology has emerged as a transformative infrastructural innovation capable of reconfiguring trust, transparency, and risk governance across financial and commercial ecosystems. This article develops a comprehensive, theoretically grounded, and integrative analysis of blockchain-enabled cybersecurity, financial transparency, and risk mitigation, synthesizing insights from cybersecurity research, decentralized governance theory, data integrity management, insurance transformation, and blockchain-empowered supply chain finance. Drawing strictly on the provided scholarly and institutional references, the study elaborates how blockchain’s core characteristics—immutability, decentralization, cryptographic security, consensus mechanisms, and programmable smart contracts—reshape risk identification, assessment, prevention, and allocation across banking, insurance, and SME financing contexts.

The article advances three central arguments. First, blockchain fundamentally alters the cybersecurity paradigm by shifting security assurance from perimeter-based defense models to distributed, trust-minimized architectures that enhance data integrity, auditability, and resilience against single points of failure. Second, blockchain-driven transparency mechanisms mitigate financial and operational risks by reducing information asymmetry, enhancing real-time visibility of transactions and assets, and enabling automated compliance through smart contracts. Third, when integrated into supply chain finance and insurance systems, blockchain enables a transition from reactive risk compensation toward proactive risk prevention and dynamic risk-sharing, particularly benefiting SMEs that traditionally face structural financing constraints.

Methodologically, the study employs an extensive qualitative synthesis of prior theoretical models, surveys, evolutionary and game-theoretic analyses, and policy reports referenced in the literature. Rather than empirical testing, it provides deep conceptual elaboration, comparative interpretation, and critical evaluation of competing perspectives. The results reveal that blockchain adoption can significantly lower fraud risk, financing costs, and default probabilities while improving trust among banks, insurers, core enterprises, and SMEs. However, the discussion also highlights governance challenges, scalability concerns, ethical implications of data transparency, and the persistent role of institutional trust even in ostensibly trustless systems. The article concludes by outlining future research directions and policy implications, emphasizing that blockchain’s value lies not in technological determinism but in its careful integration with regulatory frameworks, organizational incentives, and socio-economic contexts.