Accelerating the Fintech Revolution: How Blockchain will Change Finance Technology Forever

Fintech, like many other tech-oriented industries, is constantly evolving. There are new finance apps that are seemingly cropping up on a daily basis, offering bold new approaches to the managing and processing of payments. While this industry has been constantly growing, the arrival of blockchain technology threatens to bring an unprecedented level of disruption to finance technology. 

Although synonymous with cryptocurrencies like Bitcoin, blockchain’s use cases are continually expanding into new areas of finance, as well as the healthcare, retail, entertainment and transport industries. 

(Image: Grand View Research)

As we can see from the data above, fintech makes up the lion’s share of the blockchain market, and for good reason. Over the course of the decade, we’ll see digital ledgers leverage a fundamental change in how we send, receive, manage, and store our money. Let’s take a deeper look at how the technology will make this possible: 

Optimizing Fintech with Blockchain Technology

Blockchain essentially exists as an immutable block. With the technology, it’s possible to develop an entire ecosystem of fintech apps. Blockchain technology can transform regular financial processes into entirely transparent procedures built on secure and efficient transactions. 

When utilized correctly, blockchain can create a fintech ecosystem that can revolutionize finance completely. Financial transactions on the block need no middlemen present and are capable of establishing peer-to-peer networks, lightning-fast transactions and complete transparency. 

However, blockchain’s application within finance can account for far more than transparent transactions. With blockchain technology, users can finally recapture full control of their wealth - helping to pave the way for a fully democratized financial landscape. 

Bankless Financial Management

We’ve already seen mass cases of blockchain enabling individuals to manage their wealth without a bank in sight. 

Those who choose to hold cryptocurrencies like Bitcoin, Ethereum or any other form of digital asset, can do so with the use of blockchain digital wallets. These wallet holders are protected by private keys, whilst possessing their very own unique public address to allow them to send and receive payments with others. 

Through the use of blockchain technology, wallet holders who possess their private keys are the sole owners of their assets - unlike with traditional currency, there are no banks that take the responsibility of holding your money. 

“Bitcoin and other cryptocurrencies provide that freedom and ownership back to the population,” says Carlos Barbero Steinblock, lecturer in cryptocurrencies, blockchain, and the fintech industry at EU Business School. “You are managing your own wealth, you don’t have to rely on or trust anyone else with your money.”

(Image: Statista)

With the total number of global blockchain wallet holders rocketing towards 80 million worldwide in 2021, we can see clear evidence that blockchain’s influence in democratizing finance is already underway - helping individuals to build wealth in a way that enables them to better control their assets. 

Revolutionizing KYC

Right now, trust and identity verification is performed through intermediaries and incumbents. Blockchain has the power to alter or even eliminate the trust element that’s central to our current financial ecosystem. 

Know-your-customer will take place as a single digital entry and cryptographically secured and distributed across the network as a means of eliminating multiple entries and verification. These improvements in the field of security are set to directly aid sectors like retail banking, wholesale banking, investment banking, payment networks, lending marketplaces, equity crowdfunding, asset managers, broker-dealers and regulators alike. 

Borderless Payments

Another revolutionary feature of blockchain is that it supports borderless transactions through the decentralized currency that uses its framework. The technology can also pave the way for faster and more straightforward payments due to it costing less to make transfers between accounts. Because blockchain transfers don’t need authorization via middlemen, and banks don’t have to use resources to transfer funds, the payment processing fees for international payments are far less also. 

Blockchain will pave the way for a better flow of currency worldwide. Typically banks would charge some 10% to 15% of the amount transferred as a remittance fee - however, with blockchain, this figure can fall as low as 3%. 

Blockchain payments, as we’ve already noted, are also extremely secure since all the participants in the chain’s transaction need to provide their approval for the transaction to go through - and anybody can check the updated ledger for the details surrounding the transfer. 

Furthermore, because there’s no need for third parties to transfer funds, it’s also possible to use P2P transfers to leverage transactions. This enables banks to compete with fintech startups to generate their own suites of fintech services. 

Fintech has grown to become an influential force in the modernization of traditional financial institutions. As a result, the past 10 years has seen us transition faster towards a cashless society, with more investment opportunities and options for storing our wealth than ever before. However, the emergence of blockchain technology is set to bolster the development of fintech - paving the way to truly democratize finance and make it possible for individuals to manage their wealth without the necessity of middlemen or major institutions themselves.