Top Ways Fintech Industry Is Getting Transformed Through Blockchain
If you are a businessman who is indulged in any kind of trade ie. import-export activity, you might encounter availing of fintech services to ensure smooth trade operations throughout the year. Thanks to the outbreak of Covid-19, the growth in the Fintech sector is phenomenal, and why not? The reasons are genuine!!!
Today people have everything at their fingertips when it comes to availing or applying for trade finance service or banking services. No matter what you are looking for, just log in through the app and you get access to a plethora of financial services being offered by a bank or private financial institution. It is all about reducing the time & efforts of the customers, safeguarding their trade transactions, avoiding threats of fraud, and providing improved & complete transparency towards their banking & financing activities.
With various industries shifting towards digital platforms to experience enhanced automation & security, it is also critical for the finance industry to move to app-based operations and this is where blockchain technology can transform & revolutionize the financial tech-based industry.
Let’s first understand what blockchain technology is and how it is positively affecting the fintech sector.
What is Blockchain?In simple words, blockchain is a process of digitally recording the transactions in a decentralized, distributed, and public digital ledger so that the data cannot be altered, changed, or edited with effect from the past. If it has to, all the subsequent blocks will require an alteration after placing a general agreement on the network. Since it is a distributed ledger, no central authority of the network or any person or organization is in charge of manipulating the network.
The reason that the network offers such solid & strong security of transactions is due to its individual blocks of data that carry the information linked in chronological order. Thereby these links cannot be changed. The rapidly growing technology is making its place in every field such as healthcare, real estate, agriculture, and especially fintech.
Now let’s understand the tremendous benefits that it provides to the fintech industry:
Improved TransparencyThe foremost benefit of blockchain technology is that it eliminates the requirement of a middleman and is capable of offering peer-to-peer networks for faster transactions and absolute transparency. It makes the financial industry more transparent as the users are executing trade activities on a public ledger. The data is secured, and transparency can prevent fraud.
Bankless Finance OperationsWith the increasing internet advances, the banking & finance industry is offering digital wallets, digital lending, and digital payments. The use of blockchain makes the management easier for these processes. Blockchain-encrypted digital wallets are protected by special keys and also have a unique public address that ensures the safe flow of information.
KYC is a Big ConcernWhile executing any type of banking or financial transaction, one of the biggest concerns for the customers is establishing trust in ensuring authentic identification. Blockchain technology puts an end to all this dilemma by converting a time-consuming, lengthy paper-based, entire manual, and costly process into up-to-date records of clients through digital KYC. Now the customers can maintain their sensitive information on digital platforms with more security. They can be relieved from data & identity theft.
More Efficient Borderless PaymentAs more global traders are going for borderless transactions, financial institutions are looking to provide speedier and more efficient payment options for them. They are working on improving available resources to authorize payments and making them easier for international payments. Payments & money transfers performed on the blockchain are faster, reliable, safer, and are also traceable than in traditional banking.
Lowered CostsInvestors avoid financial advisors to get rid of higher fees. But blockchain technology allows investors to open accounts with digital financial advisors and enable them to make informed decisions. This is beneficial for consumers as investors are getting more for their money.
Immediately TraceableBlockchain technology generates an audit trail that keeps track of the origin of an asset at every step. In the present era where the consumers are likely to be more careful about their human rights concerning a product - or an industry that is prone to fraudulent activities, this helps ensure proof. Customers can share the data with utmost safety and security.
AutomationNow the customers’ transactions can be automated with “smart contracts” which ultimately improves their efficiency and accelerates the process even further. When the mentioned conditions are fulfilled, the next step is automating the transaction.
Blockchain technology is genuinely on its way to transforming the fintech industry. These are the ultimate benefits that investors are looking for these days. It is estimated that blockchain is expected to reach $15.9 billion by 2023 compared to $1.5 billion in 2018. By adopting blockchain and the latest banking technologies, banks & FIs can efficiently reduce costs, improve safety, and get competitive advantages in the niche.