Blockchain technology facilitates a more transparent, comprehensive, and secure business network. It also offers shared operating models, highly efficient FinTech processes, lower costs, and new products and services in the FinTech Industry.
As per the report by Juniper Research, blockchain deployments allow banking entities to save on cross-border settlement transactions of up to $27B by 2030, decreasing prices by more than 11%.
FinTech organizations discover that Distributed Ledger Technology (DLT) will save billions for banks and FinTech institutions in the upcoming decade.
Blockchain-based FinTech can be the new phase of the financial sector’s evolution, eliminating the need for a central authority, adding transparency, and improving security.
Here are a few use cases of blockchain technology in the FinTech or banking industry. Take a look.
#1. Banking and Lending
Core banking includes transactions, payments, mortgages, loans, and many more services which rely on legacy execution processes. It requires 1-2 months for anyone to get a mortgage and 2-3 months for SMEs to get a business loan.
Blockchain technology innovates banking and lending facilities, diminishes counterparty dangers, and reduces the required time for issuance and settlement. It enables,
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#2. Insurance
To initiate a claim, individuals need to face complex questionnaires and physical sheets. The cost of record-keeping is also high. An insurer has to authenticate user identities and contract validity. There are also costly intermediaries. The industry is very much full of vulnerable activities.
The decentralized system offered by blockchain technology transforms insurance procedures. It offers,
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#3. Global Payments & Remittances
Intermediaries are responsible for Global payments and remittances. They ask for the tax for their services. It requires 2-7 days of the time frame and charges avg 6.94 percent to send $200 among different countries. It means remittances are decreased by $48B via fees, intermediaries, and financial organizations.
Blockchain technology is helping to simplify payment and remittance procedures, diminish settlement timings, and dramatically cut costs. It enables,
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#4. Capital Markets
No matter whether the issuers are SMEs, startups, or large-sized organizations, the process of raising funds can be exhausting. Organizations face more strict rules & regulations, longer times to market, instability in the interest rates, and liquidity hazards.
Especially in evolving markets, they lack precise supervision, proper regulation adhering, and acceptable market infrastructure for issuing, clearing, settlement, and trading operations. Blockchain enables various benefits for different capital market use cases.
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#5. Trading
The trading industry remains dependent on paperwork. So it is more vulnerable to security flaws. Each transaction requires 3-4 months to process credits, document verification, and build confidence among investors.
Blockchain technology is digitizing the whole lifecycle of finance trading with enhanced security and high efficiency. It offers reduced processing time, increased management transparency, decreased funding needs, lower fraud, and counterparty risks. It enables,
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#6. Asset Management
VC firms, private equity organizations, real estate capitals, and niche markets are getting user requests to enhance liability risk management, accept more active structures for decision making and tackle the growing complications of unstable rules & regulations.
Blockchain technology is effectively simplifying asset management. It enables,
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#7. Regulatory Compliance
Regulatory compliance turned out to be highly significant in the commerce and finance sector. It is essential to guarantee that banking entities adhere to laws, regulations, and rules in their daily activities. It is pretty challenging for organizations to keep pace with the complexity of regulatory changes, specifically when they work globally.
Blockchain technology enables,
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Summing Up
The global FinTech industry is accepting the transformation with pioneering blockchain technology. No one can disregard enhanced transparency and efficiency with streamlined processes and lower costs provided by the P2P decentralized system.
Believers anticipate blockchain and cryptos to reestablish banks altogether. Others believe that blockchain will complement old-school banking infrastructure, making it highly efficient.
One thing is clear. Blockchain will indeed revolutionize the FinTech industry.
