The financial services industry has remained arguably stagnant in terms of innovation for a significant time frame. However, with the evolution of technology and its rapid advancement over the last few years, the industry has found a new direction in the form of fintech. Having said that, the traditional finance and banking sector is still crippled with several pain points, which are significant deterrents to the sector’s overall growth potential. And the largest sufferers are end consumers – be they, small business owners or individual customers.
Blockchain technology to the rescue
Blockchain technology, as we all know is a decentralized ledger mechanism to enables network participants to collaborate with each other and execute consensus-based transactions in real time. We must agree that this technology has significant potential to streamline operations in various sectors. However, one of its most potent and effective use cases is in the fintech sector. And rightly so, the fintech has the lion’s share in the overall blockchain market. In fact, the fintech-blockchain market is expected to be valued at close to $37 billion by 2029. That, in itself, is a testimony to the potential contribution of blockchain technology in the world of fintech.
Role of Blockchain in Fintech
Despite tech interventions in fintech, the sector continues to operate largely on a centralized model. The integration of blockchain will help solve the following drawbacks:
1. Dependency on third parties for financial transactions
2. Low speeds of transaction settlement
3. High operational costs which eventually get passed on to the consumer
4. Lack of trust among operating partners – due to the centralized nature and authoritative framework of traditional systems.
Blockchain addresses all of these issues by providing a platform that is decentralized, fast, and trustworthy (because of the equal distribution of power among all relevant participants). Here are some of the fintech use cases which blockchain technology is addressing:
1. Banking and P2P payments
2. Trade and Trade Finance
3. Cross-border trade and payments
4. Supply chain and logistics-related transactions 5. Digital identity systems and auditing
Ending Note
Some major corporations have already implemented blockchain technology to streamline and optimize their processes. The result has been clear – better customer satisfaction and improved profitability. It’s time that small businesses also get an opportunity to achieve these. At Payment Porte, we have developed a web3 neo-banking platform with the same intention as your vision. As we inch closer to our beta launch this year, our sole objective is to make fintech easier and less complicated. Check out our products and services on the website and follow our social handles for regular updates.