Introduction
As Blockchain technology is evolving, consumers and traditional banks are shifting towards hassle-free methods of undertaking financial operations. More and more institutions are now starting to adopt smart and modern technologies such as Blockchain, the Internet of Things, and Artificial Intelligence. These technologies facilitate the awakening of improved business transactions and make the consumer experience a soft and stable ride through a seamless process.
According to an anonymous report, more than 20% of enterprises using Fintech use blockchain technology to provide customer-centric services. Approximately 90% of American and European banks have also begun investigating blockchain technology to enhance service.
As we all know, Fintech is a buzzword in the financial services industry and everyone from established and giant organizations to startups is talking about it. It is gaining immense popularity and attention for all the valid reasons, its precise sense perpetually being thin along the way. So before you proceed further, make sure you are familiar with fintech that revolutionized the financial world.
In this article, we’re going to discuss how blockchain technology is disrupting the fintech industry. So, without any further ado, let’s get started!
How is blockchain technology disrupting the fintech industry?
1. Notable and Prominent Applications in BFSI
There are many financial service providers and banking sectors that are experimenting with blockchain for applications such as tracking records and money transactions done among other back-end functions. Blockchain-based apps transform paper-intensive international trade finance processes into an electronic decentralized record that accommodates all the associated entities that can access the source of information.
Financial institutions are witnessing a rising number of scams across the world. Fraudsters are avoiding bank controls and managing customers into making payments to them. In fact, according to a report generated by the Global Banking Fraud Survey, more than 50% of survey respondents across the world summarized an increase in both total external fraud value and volume. Global Banking fraud survey KPMG
As we all know, Blockchain is an essential part when it comes to fraud minimization. It allows you to use smart contracts to support the storage of any type of digital information. Furthermore, the utilization of blockchain for doing digital payments is highly transformative in the payments space.
2. Digital Identity Verification
Here is another area where you can improve the customer experience by utilizing blockchain technology in the digital identity verification method. But when it comes to online financial transactions, it requires a lot of moves to be taken such as authorization, face-to-face checking, authentication, and much more. So, make sure to follow all these steps for each new service provider.
Using Blockchain networks, you can also reuse the identity verification for other services and users can register their identity without repeating the registration for each service provider powered by blockchain.
3. Trading and Trade Finance
Trade finance projects still require lots of paperwork, such as preparing invoices, statements of lading, reports of commendation, etc. All members involved in the trade chain must support their database for transaction-related reports that are constantly reconciled facing each other.
Trade finance that is based on trade finance can streamline the complete trading process by getting rid of this time-consuming paperwork and administration. It eradicates the necessity for unwanted copies of the same document and integrates all the important information in one digital document. These documents can use by all network members and it regularly updates in real-time.
4. Accounting Data Reconciliation
Some financial institutions have outdated, and therefore ineffective databases and reporting systems. If you are using Distribute ledger technology, it will help you to revolutionize the way financial data is record and exchange within the banking sector and corporations. The purpose of a semi-manual data reconciliation is old-fashioned when blockchain becomes twisted into banks’ daily operations.
5. Syndicated Lending
Syndicate lending is also known as a financial activity where blockchain plays a vital role and becomes a game-changer. As we all know, there are many participants involve in it, and due to a few of them, the traditional processing of syndicate loans by banks can take up many days.
Blockchain helps you to improve this process and make it more simple and transparent. Using smart contracts for syndicated loans processing can bring the organization members a variety of advantages. All participating banks can gain the benefit by swapping information through blockchain. This lowers the cost of meeting regulatory requirements for syndicated lending and saves a lot of time.
Final Thoughts
Blockchain technology has tremendous potential in the financial services industry and there are possibilities that it will still explore. Blockchain poses some difficulties that need to address to fully utilize its potential in the financial services industry.
Already all domains have started utilizing blockchain technology to perform seamless financial operations that will enable the initiation of fraud-free and cost-effective transactions in the future without any doubts.
