The Fintech industry has been the testing ground for every new technology developed, and the latest technology; the blockchain is changing the Fintech horizon and is already creating enough disruption to the financial sector of the economy. Even though the Fintech industry survives the introduction of new technologies and software; it’s welcoming the innovations that blockchain has to offer by resetting the industry to accepting the blockchain style and change the face of Fintech in the world.
So what does Blockchain mean for the Banking Industry?
The blockchain is that technology that generates Bitcoin, the main digital currency used in the crypto space. However, in the Fintech industry, it is set to change some aspects like:
Reduce the cost of Financial Transactions: every financial transaction occurred through third-party intermediaries like banks or financial institution or companies with a high transaction fee that clients resent. Blockchain will change this by eliminating third-party systems where payments are made directly to the merchants or companies through their blockchain account at a lower payment fee.
Increases Security: with thieves and hackers on the prowl, financial houses experience sleepless night worrying about their security systems. Although hackers are trying to penetrate the blockchain, it has proven to be the most secure system yet and this is because of its decentralized nature. The decentralization nature of the blockchain allows financial institutions to create a cloud system that employees can use without jeopardizing their security, safety, or that of the company.
Faster Transaction Process: the traditional banking activity takes plenty of time for transfer and confirmation that causes unnecessary delays for business people. For example, a normal transaction goes through a gateway, stock exchange, and the banks. Furthermore, in the event of a problem, it also takes plenty of time to reconcile accounts and check transaction route and so on. However, with blockchain technology, the transaction time is reduced, confirmation is quickly done, and this makes business smoother and better.
Transparency and Trust: one reason blockchain is welcomed in most industries is the increase transparency and trust that it brings between the parties involved in a business. Blockchain technology makes it easy for customers and merchants to enjoy business through peer-2-peer dealings.
Disruption of the “big boys” hold: the financial industry is at the mercy of the big guns of the industry. With the introduction of blockchain removes power from the so-called industry big boys such as the government and central banks who intervene in huge transaction deals with major companies or contract deals. It will also ensure the efficiency and effectiveness of the system.
The above are some problem that blockchain technology will correct as it is gradually accepted by the financial technology industry. As per the future of Fintech with blockchain technology, economist predicts that once banks adopt this decentralized technology, customers will enjoy more benefits from the banking and financial industries. Bankers also think that blockchain technology has the marketing potential to improve the margins in the industry.