Blockchain Technology : A Catalyst for Disruption in Finance World

Ways blockchain is revamping the fintech industry:

By now, you might have got a clue of the role of blockchain in fintech in the above paragraphs. Let us see how blockchain is revamping the fintech industry. When we talk about the impact of blockchain in fintech, the best way to understand and analyze the effect is to focus on the key areas of the economy. Hence, let us turn towards the ways blockchain is revamping the finance world.

1. Banking and P2P payments

There are indeterminate incompetency and imprudent bureaucracy in most of the banks, and this concern is persistent in the clearing and settlement domains of the banks. The gap which is created by the conventional ways of banking and the involvement of hierarchy at a different level can be avoided if there is a decentralized system that follows special algorithms for faster transactions- hence the need for blockchain technology is justified in banking and P2P payments.

Besides, all the banks along with central banks across the globe are contemplating the power of introducing their Digital Currencies based on blockchain. Since cryptocurrencies cannot be regulated by any kind of monetary policy, the aim behind introducing their own Digital Currency is to make sure that any digital currency provided by the central banks will reduce the popularity of all the cryptocurrencies. This will give absolute control over financial regulations and monetary policies to central banks. Also, banks are aware of the key benefits of digital currencies in financial service based on blockchain technology over the traditional ones, such as faster transactions and lower transaction cost. This urges all the financial bodies in the world to explore the possibilities of making the shift to digital currencies and to bring the blockchain technology-based payment into practice.

The payment system we have today is not efficient either, which calls for an alternative way of payments which can be done with cryptocurrency using blockchain technology. As credit card was invented before the internet and thus it has been tailored for physical payments, rather than internet payments. Hence, internet payments through credit cards pose many issues, consisting of – Fraud, high processing fees security concerns. This can be taken down by blockchain adoption in financial service in the banking sector.

The international payments system is still standing at a very basic and undeveloped stage. It is a compartmentalized and closed system. It takes usually more than a day to process transactions and can only be done during the opening hours of the payment agencies. It is because payment transit through multiple banking systems having their own different processes before reaching its destination. This increases the work of cross-checking data. In these current circumstance, use of blockchain technology and Digital Currencies is the solution to this. Implementation of blockchain in banking surely simplifies the process of cross-checking data across different organizations involved in the international payment transfer and can be easily authenticated over several levels of checks.

Providing banking services to the #unbanked shall provide the opportunity to the people who are unable to open bank accounts using decentralized ledger technologies, to use banking services through their smartphones. As per a report issued by McKinsey, about 2.5 billion adults have no access to banking services, which is equal to half the adult population of the world. But the majority of these groups have access to smartphones. Using smartphones, people can send and receive payments or banks can give them direct access to #microcredit.