New-age technologies such as AI, ML, and blockchain have all contributed to the success of the fintech industry
The fintech industry is recognising blockchain’s transformative effects on streamlining business operations, increasing income, lowering risks, and improving overall user experience
Read to understand how blockchain’s speed and efficiency will undoubtedly have a significant impact on the financial sector
Fintech, like any other tech-related industry, has accelerated in recent years. New finance solutions emerge daily, offering novel and convenient approaches to payment processing and management. New-age technologies such as AI, ML, and blockchain have all contributed to the success of the fintech industry.
Blockchain is one of many disruptive technologies reshaping the fintech industry. The fintech industry is recognising blockchain’s transformative effects on streamlining business operations, increasing income, lowering risks, and improving overall user experience.
Blockchain’s Potential In The Fintech Sector
Dependency On A Centralised System
Fintech solutions may have appeared convenient, but the actual power to facilitate transactions has always been held by third parties, such as tech solution providers. Users must also provide authorisation for any transaction or transfer of funds.
Numerous issues, such as fraud, forgeries, and questionable lending practices, have an impact on centralised financial institutions. Accessibility also has significant gaps.
Lack Of Credibility
When users interact with fintech applications, they are unaware of what is happening on the other side. This leads to a lot of misunderstandings and increases the risk of identity theft, which decreases trust in the process overall.
Blockchain application development services, with their transparency and immutability features, solve this fintech problem.
Slower Operations
Blockchain is required for fintech because the involvement of numerous third parties in the procedures frequently causes delays. As a result, customer satisfaction suffers and the commercial environment becomes more turbulent.
Increased Operating Expenses
When it comes to fintech, time is money. Blockchain technology has emerged as one of the most innovative fintech innovations to date. It can cut costs by half by eliminating the need for multiple people, making the process public, and shortening the time required.
Blockchain’s Impact
Blockchain has already had a significant impact on the fintech industry. Here are some of the areas where it is making a difference:
P2P Transfers
P2P payments have now simplified transactions between individuals and organisations. Companies can now process payments at a lower cost than banks thanks to blockchain.
Providing Banking To The Unbanked
Over 2 Bn people worldwide, including 191 Mn in India, do not have bank accounts. They are, in a nutshell, unbanked. People who are unable to open a bank account will be able to do so thanks to blockchain technology.
People who do not have bank accounts but own smartphones could open a bank account powered by the blockchain using their smartphone. As a result, this technology might help increase access to the financial sector.
Loans & Credit
Applying for a loan or credit in today’s financial system is a time-consuming process. In many cases, one must submit collateral, provide personal information, and physically sign documents. The blockchain will allow loan applications to be processed in hours rather than days.
In the lending and borrowing process, blockchain ensures trust, security, and efficiency. The accuracy, timeliness, and transparency of financial data will only improve credit risk assessment.
The Blockchain And The Trading Industry
In its current form, the global trading market is heavily reliant on paper documents. When purchasing government bonds, for instance, one frequently receives actual bonds. In the trading world, a transaction can take up to three days to settle, which is still extremely slow.
Every transaction could live in a wholly digital form thanks to the blockchain. There would be no requirement for any physical documentation due to the tokenisation process. With the elimination of third parties, a transaction could be completed in minutes.
Regulatory Audit And Compliance
Several blockchain firms are developing blockchain-based regulatory compliance solutions. The immutable records that the blockchain generates for each transaction are a significant benefit. As a result, auditing a company’s activities will be much easier. The immutability of the blockchain also reduces the possibility of inaccurate reporting, ensuring the accuracy of all records.
Future of Blockchain In Finance
The blockchain industry is still in its infancy. However, it already holds a lot of promise for fintech. Its speed and efficiency will undoubtedly have a significant impact on the financial sector.
