Emerging technologies have reshaped the financial world through innovative means that cater to evolving client expectations of personalization and convenience.
Fintech has evolved as one of the most innovative, cost-effective, and turbulent technologies. The word Fintech says that they create this innovation by combining the finance industry and technology.
These include building the digital infrastructure by the creation of a unified payments interface(UPI). It based ecosystem to boost payment transactions, creating high-speed internet available at low prices.
Therefore, increasing smartphone penetration, like everything from a consumer’s ability to go online and see transactions to apps.
However, that permits you to pay friends, to tools that allow financial institutions to make quick lending decisions. These are all parts of the Fintech industry.
Even investors are also able to do their research, choose the stocks. And also see their portfolio performance in real-time, and many more examples are included in Fintech. This shows that the Financial industry works have changed over time.
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Advantages of Blockchain technology:
With the help of Blockchain Technology , fintech will change the financial industry in a completely different way. By taking advantage of this new factor in the financial sector, fintech companies can use the properties inherent in blockchain systems to truly change the way the economy works. It significantly reduces transaction costs and timelines while increasing transparency and security. That is why stock markets, banks, asset management, and insurance, and many more financial companies are already investing in blockchain projects.
During the past few years, we have already seen how the fintech industry is developing with artificial intelligence and cloud computing. Financial risk control and management use it. As it helps to create a more efficient and stable operating environment. But the Fintech revolution has been in full swing for the last few years. There are some complex challenges that Fintech needs to resolve and it requires improved protection. Even after many financial institutions have already adopted fintech services. It involves some hidden risks in fintech like data breaches. Also the money laundering risks, digital identity risks, cloud base security risks, etc. And for that, Blockchain may be one of the best solutions to provide high security against frauds. Also, cybercrimes, lower operational risks, and reducing administrative costs.
Hence, Blockchain-based Fintech can be the next stage of the financial industry’s evolution.
Blockchain has been made with tamper-proof and distributed nature which is a key to build trust in this increasingly digital environment. This trend is increasing the $1.5 billion invested in 2018 with expected to grow to $15.9 billion in 2023 which means the investment will be increased 10 times more. These numbers indicate that blockchain opens a new whole world with new opportunities for the financial Industry.
Adoption of blockchain is Worthy?
Blockchain provides a secure base for all types of Fintech apps in the form of blocks, nodes, and miners. It uses blocks in a structure to store transactional records in several databases which create a chain of multiple blocks, in a network connected through peer-to-peer nodes. Every node creates a copy of the blockchain. Whenever any newly mined block has been created, a network must algorithmically approve for the chain to be updated, trusted, and verified. This type of storage is referred to as a digital ledger. Blockchain is transparent, every action in the financial processes can be easily checked and viewed. Hence, it maintains security, integrity and creates trust among users.
They make Blockchain with a tamper-proof ledger, it follows smart contracts and provides personal identity security. It offers peer-to-peer networks, lightning-fast transactions, total transparency, a financial transaction with no middleman, a decentralized database, etc. for businesses across all industries and that’s why Fintech found it right to adopt blockchain technology.
Checklist of How Blockchain fits in the fintech industry
Our current economy is heavily reliant on centralization, while blockchain provides a decentralized way which means we’d get an opportunity to recreate a new way to operate our economy, let’s see how it will help in.
Here is a checklist of important benefits that shows blockchain fits into the fintech
A faster transaction with no middleman :
In the traditional banking process, money or asset transactions have always been a cruel process. Banks need to complete their protocols before transferring the money and it takes a lot. Blockchain fintech apps enable lightning-fast transactions in real-time and remove third-party people and therefore they do fast transactions sometimes in a minute only even if the amount of money is large.
Secure digital identities :
In the fintech industry, the biggest danger is sending money to the wrong person. But as we mentioned, blockchain is a peer-to-peer network for money exchange. Users will never have to worry about the person who handles the transactions. There would be no risk of dealing with the wrong person. As they only register blockchain fintech apps once and provide a private key to handle their profile. Low chances of fraudulent data privacy.
Blockchain created an agreement between two or more parties without any involvement of a middleman. This contract exists between distributed and decentralized blockchain networks.
Decreased transaction costs:
Blockchain decreases the cost of sending and receiving money, because it saves a significant amount of time and money for all, and even it removes the middleman which means reducing all unnecessary costs and fees which makes transaction costs cheaper.
Internet of Things:
Nowadays every device connects to the internet and the number of devices is continuously increasing, and the risks of hackers are also increasing. They can easily reach your data through a single device That connects to the internet. If blockchain integrates with the Internet of Things. Therefore it reduces the possibility of data breaches, cybercrimes.
Security improvements across the board :
The main purpose of using blockchain is that it should protect the data on it. Therefore, the Blockchain uses a decentralized system that creates separate storage space and stores the data in it, and generates a secure layer of cryptography on top of that storage space. They also used robust security algorithms backed by high-level identity verification protocols.
Hence, it is highly secure and reliable, making it impossible to hack the system or attack it.
Blockchain-based Fintech The Next Revolution
Blockchain in fintech opens up a world with a highly secure and effective alternative to traditional banking with the ideas of fairness and decentralization. We have already started to deal with the changing trends of Fintech like real estate tokenization, supply chain management, healthcare, etc.
Low transaction costs, quick money transactions, high-level security, transparent financial tracking, financial transactions without involvement of middleman, etc All these qualities of blockchain technology make it one of the most revolutionary technologies in the 21st century.
According to the latest data, the global Blockchain market grows at a CAGR of 67.3% to reach a value of US$ 39.7 billion between 2020–2025.
And this proves that Blockchain and Fintech are going to shake the Financial world in the next few years