Blockchain In Fintech: The New Age Of Banking
The application of Blockchain in Fintech is proving that virtually every industry aspires to implement the technology in its internal process. Today, tasks that previously required bulky machines, tangible or physical currencies, and human hands have been efficiently digitised.
There are copious technological advancements making waves in almost every sphere of global business, and the financial service industry is no exception. Therefore, many will agree that the fintech industry is one of the fastest-growing sectors of the decade.
With an internet connection, you can engage in your day-to-day banking activities. Things like trading and investment in the stock market, widen e-commerce platforms, make online payments, exchange currencies online, and undertake equity funding can be done at the comfort of your home seamlessly without stress.
Currently, there are lots of finance apps designed for personal and business uses. The introduction and application of Blockchain in Fintech have brought about an undisputable expansion of and revolution of the financial services sector globally.
Entrepreneurs and startup founders are now venturing into different areas of commercial activities like payments, peer-to-peer lending, wealth management, etc. Consequently, innovations that have resulted from the introduction of Blockchain in fintech have boosted investments in the global financial sector.
The way and manner the Fintech industry is leaving behind the stagnant method of conducting business is quite evident and visible to the blind. Similarly, Blockchain technology in Fintech has intensified the fourth industrial revolution.
An Understanding Of Blockchain Technology
The technology was originally the invention of the anonymous fellow called Satoshi Nakamoto, who initiated the technology in the development. Blockchain is a digital ledger that houses data and information which cannot be altered or changed.
As a result, you can record just any activity on the Blockchain to which a value can be attached. The blockchain technology permits the distribution of information across various nodes but cannot be copied.
You can learn more about the Blockchain in my previous article titled blockchain architecture explained.
The Impact Of Blockchain In Fintech
In the above, about 77 per cent of the financial services industry plan to implement blockchain technology into their processes by 2020. Likewise, estimation by Jeff Koyen, the Strategic Advisor of 360 Blockchain, predicts the growth of the blockchain market to more than $7 billion by 2022.
Above all, the architectural design of the Blockchain network will make the banking industry more seamless and efficient experience for both banks and customers alike. Besides, blockchain application in Fintech promises to remedy inefficiencies in the setups of many banks.
Certainly, the technology will help to reduce the incidence of fraud and cyber-attacks in the financial industry. By adopting Blockchain technology in Fintech, companies will have access to a decentralised network to share or transfer secure and unaltered data or information.
That is to say, data breaches and other fraudulent activities will significantly come down.
There have been numerous miscellaneous inventions that have come about due to the support of blockchain technology. One such design is smart contracts that require an agreement to be met before any transactions conclude.
By utilising the potential of blockchain technology in fintech, the new entrants will take away a considerable chunk of business from traditional financial service providers. For instance, with the development of artificial intelligence, blockchain technology will become more structured, efficient, and mainstream.
When applied in the stock market, blockchain technology will help eliminate the unwholesome tactic such as stock tampering, naked short selling, intermediary commissions, long processing time, and charges.
The approach will help to reduce the cost of making transfers through large portals like Western Union and MoneyGram. This development, as a result, will stimulate global trade and wealth creation.
Blockchain In Fintech Use Cases
At the moment, Cryptocurrency has the largest share of the fintech market. There have been lots of fintech startups that have built their businesses around Bitcoin.
An excellent example is the global Bitcoin payment processor BitPay, which allows merchants like Microsoft, NewEgg, etc. to accept bitcoin payments from customers. Many Blockchain-based fintech solutions are different from bitcoin-based platforms.
Wirex is a banking solution provider that employs the services of Blockchain technology in their business processes. The company bridges the gap between traditional money and Cryptocurrencies by providing bankless financial services to its customers.
Wirex provides three primary functions, which include a mobile app, instant remittance service, and 2-way Bitcoin debit cards. With the Wirex app, users can perform 24 hours of financial transactions.
The physical or virtual Wirex cards permit on-demand conversion between Bitcoin and traditional currencies like GBP, EUR, and USD. The instant remittance service provides a secure money transfer without cross-border fees.
Chain is a Blockchain-based Fintech Company that develops and supports open-source Blockchain protocol for financial services. This Fintech company has partnered with leading financial service providers like Nasdaq, Visa, Citi, Capital One, and Fiserv.
They provide products such as the Chain Open Standard, which is an open Blockchain protocol, Chain Core, which is an enterprise-grade production and the Chain Sandbox.
In short, Blockchain technology can revitalise and revamp virtually every industry. Leading financial service providers like JP Morgan, Deutsche Bank, KBC, among others are buying into the idea of Blockchain technology.