Smart Contracts in Finance and Banking Systems in the Era of Industry 5.0: A Systematic Review

Blockchain-based smart contracts are an emerging technology that has attracted significant interest from financial institutions, the banking sector, the academic community, and technology developers, particularly within the context of Industry 5.0. These sectors recognize that smart contracts have significant potential for benefit and innovation. Due to their self-executing, customizable, and tamper-proof nature, they are seen as critical to the transition to a more efficient, secure, and transparent industry. In our overview, we have divided the initiatives into two groups based on their use case. Integrated solutions for existing systems aim to improve credit management, compliance, risk management, digital identities, and insurance. At the same time, autonomous solutions interact with existing systems to provide new or modernized products, including automated negotiations, settlement processes, crowdfunding, transaction and asset management, wealth management, derivatives products, and prediction markets. However, the use of smart contracts in finance and banking is still in its early stages due to numerous open challenges that include security, privacy, scalability, and complexity. This paper systematically reviews 50 peer-reviewed publications and 21 innovation projects and provides an in-depth analysis of the strengths and weaknesses of smart contracts in the financial sector. This work provides a comprehensive overview of the opportunities and challenges faced by stakeholders employing this technology. As a guide for researchers and practitioners, the article provides a detailed overview of the application of blockchain-based smart contracts in the banking and finance sector. We assess the progress and highlight the potential benefits of these contracts. However, we also highlight the challenges associated with their implementation. The article concludes with a comprehensive, critical discussion of overcoming challenges and obstacles. This means moving beyond the hype phase and demonstrating the commercial viability, reliability, and effectiveness of smart contracts to achieve widespread adoption in the financial and banking sectors.