Fintech based on Blockchain technology may be the succeeding step in the evolution of the financial industry, which is likely to increase transparency, remove the middleman, and enhance the protection of every transaction. A lot of industries are seeking ways to integrate Blockchain into their infrastructures. But why this emerging technology is becoming the primary choice for businesses to prosper in the digital age?
Let’s look at how blockchain has essentially transformed the fintech industry?
Administration and Retention of records
The lot of paperwork and documentation that needs to handle when working in the banking industry is inevitable. Many available certified and safe document management tools as well as services are pricey and sometimes need third party engagement. Copying or modifying documents, whether digital or physical, is possible. However, by utilizing blockchain technology, you can include the authentication within the document itself and secure the document from altering or changing through a closed-loop tracking system.
Establish a blockchain platform
Blockchain is similar to a traditional ledger of an accountant. Pages in a list will record annotated transactions and time-stamped, and blocks made in a blockchain will perfectly document transactions. A blockchain can digitally record the complete life cycle of money when it moves and changes hands with time stamping every transaction and tracking it chronologically.
Blockchain has the competence to offer the financial sector the very demanding and long-awaited tools for fraud prevention. Financial transactions are difficult by the need for collateral, currency disparities, the transmission of information among different parties, and many other factors. But, with the Blockchain, data can be transferred in real-time, reducing the probability of fraud. A smart contract, which may be done with Blockchain, also helps decrease financial fraud. A smart contract is a computer program that runs over a blockchain and includes a set of rules that administrate how the parties interact. This makes the performance or negotiation of an ad easier, more consistent, and more reliable.
Secure payment options
Blockchain technology aims to offer international payment processing systems which are fast, secure, dependable, and low-cost. This is attained by the use of encoded distributed ledgers, which enable reliable real-time transaction verification. A significant advantage is discarding the requirement for intermediaries such as clearinghouses and correspondent banks. Because of blockchain fintech applications, the procedure of transmitting money, without the amount, is significantly faster, and the transaction is also more transparent, smoother and error-free.
Finance & management of the supply chain
This one is the most significant application of blockchain in the fintech industry. The financial business may take advantage of blockchain technology in many areas of supply chain management. With the establishment of a single source of truth for critical zones in the supply chain, for example, creditworthiness, purchase order receipt and approval, supplier inventory levels, and more, a quicker settlement turnaround time may be attained at a minimum cost. It also facilitates the fintech business is dropping the risk of financial operations.
P2P (Peer to Peer) Transfers
Small and medium-sized organizations and Individual customers both pay substantial transaction costs when transferring money overseas. Customers can utilize P2P transfers to transfer money from their credit card or bank account to another person’s account via the internet or through the phone. Peer to Peer transfer programs prosper on the market, but each one possesses its own set of constraints. Moreover, some P2P services take high charges and are not safe enough to keep crucial information. Also, cross-border transactions are often delayed. Despite the dangers included with blockchain technology, it can change the way FinTech companies operate in the future.
Blockchain technology has the potential to solve this issue, reduce cross-border transaction costs and simplify remittances. No geographical boundaries are there with the Blockchain; it is practically everywhere, facilitating global peer-to-peer (P2P) exchanges. Moreover, since blockchain-based transactions are real-time, the receiver will not wait weeks or days to receive funds.
Blockchain has resolved all the worries that the internet is facing; the fundamental goal is to make industries both legal and infinite at the same time. With Bitcoin technology revolutionizing approx. every aspect of business, the finance sector is not left behind. Fintech, adopting Blockchain and cryptocurrencies such as Altcoin and Bitcoin, is gathering a lot of interest nowadays.
Bank Records for Businesses and Individuals
Small enterprises and Individuals may also use blockchain Fintech to receive loans quickly depending upon their credit history. Lenders may consume a long time to inspect the credit history of the borrower, and small enterprise owners do not have access to old-style business credit reports provided by third-party credit agencies. However, Borrowers may utilize Blockchain to make their credit reports more transparent, accurate, and securely shareable.
With blockchain-based credit reports, difficulties and data verification costs are reduced. The data is also given back to people because it is no longer kept in the central repository.
Blockchain is revolutionizing the Fintech industry in a lot of possible ways. Some of them are discussed above, there may be some that are not discussed but all endorse the industry to adopt this technology.
About the author
Christina started his recruitment career on the agency side. Since then, she’s built a career helping customers get the most out of HR technology. She’s currently a Customer Success Specialist at Unify and spends her time speaking to in-house recruiters all over the world - helping them solve their recruitment challenges, and get the most out of our talent acquisition software.
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