Blockchain gained immense popularity towards the end of 2017 because of the crypto hype and since then, we have seen plenty of implementations in a variety of industries. However, it should be noted that in the World of FinTech, blockchain is not limited to cryptocurrencies only. We can use it to revolutionize the entire niche by:
Every industry must offer security, privacy, efficiency, and scalability to its consumers. In traditional systems, this combo either does not exist, or we need multiple tools and technologies to provide a satisfactory user experience. However, since these three pros happen to be an integral part of the blockchain, all the businesses implementing it can enjoy the benefits.
It gets rid of all the physical needs required to operate a business. For instance, talking about the banks, they need to offer branches and ATMs to serve more customers efficiently. However, with the help of blockchain, these expenditures can be eliminated while expanding the reach to even more customers.
Since we are talking about efficiency here, it is worth mentioning that according to research, blockchain is expected to diminish the costs of central finance reporting by almost 70% – which would be phenomenal!
Moreover, the technology is evolving rapidly and this is the perfect time to enter the FinTech niche and become a part of International competition.
Let’s have a look at a couple of instances where blockchain offers its unparalleled benefits.
In the traditional banking system, if you ever have to conduct a transaction, the payment usually travels through several intermediaries before reaching the target account. This is not only inefficient and expensive, but it enhances security risks as well.
It is worth noticing that cryptocurrency is basically a payment method with no intermediaries. The payments are deposited in respective wallets instantaneously without depending on any 3rd party. Even some prominent banks are testing the practicality of blockchain-based networks to revolutionize their century old systems.
Fraud and incompliance happen to be two of the most obvious concerns faced by the insurance industry. Since some ‘big fish’ are related to this niche, it is important to implement a robust technology in this sector. According to Accenture’s research, almost 33% of insurers would start using blockchain by 2020.
Its smart contract technology and decentralized nature would significantly help in the reduction of frauds and centralization of decision-making authority, respectively.
If you have ever seen a normal working day at a stock exchange, you must be aware that there are plenty of processes involved together with burdening paperwork. Just to list a few, every purchase has to pass through the following chain:
What’s alarming is that a single transaction may take about 2-4 days under normal circumstances and add a few more if there is a busy day or weekend ahead. This is not practical in an economy where time is money!
If we use blockchain in this particular aspect of FinTech, the brokers can be relieved and the trade lifecycle (as mentioned above) can also be optimized by many percent. It would help stock markets significantly in reducing fraud, enhancing efficiency and boosting the accuracy of trade accuracy.
Indeed! Even though the conventional banking system has been serving us for several decades, it still has no feasibility to tap the ignored audience, which accounts for over 1.5 billion. They either happen to live in a remote area or belong to the unbanked/underbanked class. Since the current banking system has its limitations, roughly 400$ billion are lost annually.
An alarming report released by the CFPB clarified that almost 1/10th of the adults living in the USA do not have any credit history.
Blockchain has the potential to tackle this issue quite efficiently since it does not depend on geographical boundaries and hence, organizations can incentivize the potential audience remotely. Moreover, a couple of blockchain-based services are already in the market which are providing credit scoring facilities to several FinTech businesses.
It is quite evident that in order to bring efficiency, security, and scalability in the niche, companies must think about implementing blockchain-based use cases at their earnest. It would not only help them in earning more while keeping the expenditures low, but the untapped audience would also become a part of the FinTech niche.
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