Blockchain — The Future of Fintech & Beyond
Our global financial system serves billions of people and moves trillions of currency every day. However, the system is riddled with flaws, like cost discrepancies, timeline delays, redundant processes, that cause friction and open doors to fraud and criminality. This makes our system susceptible to vulnerability.
Doesn’t it make you wonder why our banking system is so inefficient?
If you think about it, for starters, the system is outdated with a conundrum of industrial technologies and paperwork wrapped in a digital cloak.
Secondly, it is centralised, making it resistant to change as well as prone to failures and cyber attacks.
Thirdly, it is exclusionary, denying basic financial tools to billions of people.
Bankers have mainly avoided the kind of creative destruction that is necessary for economic vitality and advancement, despite the fact that it is messy. But the solution to bringing technology and digitalization at par has emerged in the form of blockchain.
Many financial institutions, insurers, and professional businesses are investing in blockchain development services because of the benefits that such a disruptive technology provides to them.
What is Causing This Avalanche of Change in Interest?
For the first time in the history of finance, companies or individuals can forge agreements, make transactions, and develop value without relying on mediators such as banks, other agencies, or even government authorities to authenticate their identities, build trust, or perform crucial business functions.
Blockchain in fintech industry is tapping and changing anything that is remotely financial or transactional. The question remains how well can businesses embrace this digitization of the traditional fintech industry?
Ultimately, blockchain in fintech industry is going to capture and transform the overall business landscape entirely as per the Market Research Future report, which says that by 2023, the global blockchain in fintech market will be worth USD 6700.63 million, with a CAGR of 75.2%.
According to Statista, the application of blockchain technology in the financial sector is expected to develop further in the next years, reaching a market size of approximately 22.5 billion U.S. dollars in 2026.
The Question Is To Use Blockchain Or Not?
The future of blockchain in finance is becoming brighter and more prominent as businesses are increasingly measuring blockchain fintech use cases and making their decision base on this, so that their customer needs and demands are met in a better, faster, safer, and more efficient manner.
- Reduced Cost
Banks have recently discovered that application of blockchain in finance can help save up to $20 billion on infrastructure expenditures by 2022.
Banks can reduce interactions with counterparties and intermediaries by implementing smart contacts within a platform. They can also reduce the cost of contract management and execution. Banks can also lower the cost of transactions between banks using blockchain.
2. Faster Transactions
With blockchain any transaction can be completed in seconds, which is somewhat faster than traditional techniques.
Banks may now avoid using middlemen, allowing them to assure that consumers finish transactions more quickly. Customers and banks will be able to complete and process more transactions as a result of this
3. Tighter Security
Banks can use shared ledgers to improve the security of transaction data. For starters, they’ll be able to finish transactions more rapidly, lowering the chance of someone stealing transaction data or diverting cash. Each transaction has two security keys.
A public key is available to all users, but a private key is only shared by the persons involved in a particular transaction. Also once it’s verified, the data of the transaction can’t be changed.
4. Improved Data Quality
Any sort of data can be stored on a modern blockchain, and it can be accessed according to preset rules and laws.
Smart contracts are a type of technology that automatically validates and enforces contracts. By transferring banking data to shared ledgers, the banks gain access to blockchain benefits like security, trading, auditing, and speed.
5. Robust Digital Currencies
The use of digital currency by banks enables them to do a variety of transactions.
Banks will be able to clear and settle financial trades more quickly and securely with cryptocurrencies. In the future, banks will attempt to make digital currency a regular currency.
6. Better Accountability
Banks will no longer have to worry about large errors or the misappropriation of corporate assets thanks to digitally created transactions.
They won’t have to be concerned about crucial information being falsified, because blockchain makes all transactions easier to examine and verify. With this banks will be able to conduct transactions more precisely and consistently.
7. Stronger Compliance
Banks can grant access to the blockchain to auditors and government officials. Auditors and the government may see business unfold in real time with this access.
Banks can also discover suspicious transaction activity and streamline the auditing process. Financial institutions can now supply easy-to-find digital information and save time throughout the auditing process.
8. Reduced Error Handling
Banks have also profited from blockchain because it has made it easier for them to reconcile transactions. For e.g. they can track transactions more quickly and detect mistakes more promptly.
This enables them to detect mistakes prior to the completion of a transaction. As a consequence, they’ll be able to detect and correct faults before they become an issue for the institution or its consumers.
Blockchain equals security and profit. So, if you own a business or are in a leadership position, you must start considering a reliable blockchain app development agency to help you re-imagine your business model and understand how blockchain development services can help you stay afloat and competitive in the market.
Blockchain Beyond Bitcoin
Though Bitcoin is the most widely utilised application of blockchain, it’s important to remember that blockchain may be used to immutably store any amount of data points in any business. Fintech is rapidly catching up to cryptocurrencies in terms of blockchain usage, especially during the accelerated disruption that began in 2020 and is expected to continue in the coming years.
The benefits of blockchain in financial services are multiplied by the digitization of financial instruments such as digital assets, smart contracts, and programmable money, which provide unprecedented degrees of connectivity across products, services, assets, and holdings.
Process automation decreases errors, delays, and operational and transactional expenses, resulting in a system that is more open and accountable. The cost of capital will be cheaper as a result of a more streamlined approach that cuts expenses and aligns stakeholders.
As a result, additional liquidity will be available along with the opportunities for new digital instruments.
It would be difficult to find a use case in financial services where blockchain would not be beneficial. Trade finance, asset management, capital markets, banking and lending, insurance, and other industries would benefit from the distributed, immutable ledger technology’s greater privacy, accuracy, and security.
Blockchain deployments, according to Jupiter Research, could save banks up to $27 billion in cross-border settlement transactions by the end of 2030, reducing costs by more than 11%. Banks and big financial organisations acknowledge that blockchain technology in fintech will save them billions of dollars over the next decade.
To Conclude
The capacity of blockchain to adapt to new changes in financial services is obvious. Companies all across the world, including some of the biggest names in banking and finance have begun to approach blockchain fintech companies to realign their operations with blockchain technology financial services. This demonstrates Blockchain’s ability to propel enterprises forward.
This game-changing technology has the potential to fuel creative Fintech ideas and transform the financial environment. With their experienced and competent staff, several Blockchain development companies are entering the competition to transform the face of the financial world with Blockchain.
As a result, now is the moment to incorporate blockchain technology into your transactional operations and move your company to the next level.
This necessitates the use of a blockchain development services company that has an extensive experience in application development and implementing cutting-edge technologies for clients’ businesses. Make sure the organization that you choose has a thorough understanding of how to implement blockchain finance technology across various domains while maintaining security, confidentiality, and scalability.
