How is Blockchain Technology Being Utilized in Fintech Solutions?

Blockchain Technology has evolved drastically from 1991 to the Present. The popularity of blockchain keeps on growing, resulting in drawing the attention of diverse industries. Fintech is one of all, that is experiencing the transformative impact of blockchain technology. It helped the finance sector generate more revenue, improving the end-user experience and reducing risks in business operations.

According to statistics, the fintech blockchain market is expected to reach $36.04 bn by the end of 2028. But what exactly is blockchain technology and how is it used in finance and banking solutions for better results?

In this blog, we have covered all the answers to the doubt about how blockchain is helpful in the revolution of the fintech industry. So let’s get started.

What is Blockchain Technology in Fintech? 

Blockchain technology is a data management system that allows information transfer within the business network. There are two ways in which the blockchain interacts with the fintech. Blockchain is an important part of all cryptocurrency operations.  It is one of the key processing tools at the time of using Bitcoin or Ethereum to pay for something on the internet. All the fintech platforms that have cryptocurrency integrated have to interact with Blockchain. 

On the other hand, blockchain technology has a decentralized and transparent nature which provides enhanced security, efficiency, and thrust in financial transactions as well. The technology has the potential to revolutionize various aspects of fintech such as smart contracts, verification identifying, payments, and remittances. 

Ways Blockchain is Utilized in Fintech Industries 

Fintech industries are updating day by day, and blockchain is one of the major technologies behind this. Let’s have a look what are the changes brought by the integration of this: 

Enhancing Security 

According to the latest data, approximately 33% of consumers become victims of identity theft. Since then, it become an issue for fintech and banking firms, and they are also required to implement know-your-client and anti-mobile laundering procedures following oversights. This means that they need a lot of work to do and that can slow the process eventually.

Thus, implementing the blockchain-based system can improve the process. The user has to manage and share the data only once and the secret code is given to them that they can use globally anytime. However, the identity provided to each is different so the security is also enhanced. 

Reduced Transaction Costs

Multiple things have to be considered at the time of an online transaction such as applications or trading companies, intermediaries, and some transfer channels also that slow down the process and introduce some extra charges to it. And when we talk about international dealing it is even more. Many fintech software development companies are earning a huge amount of money out of this procedure.

So implementing the blockchain in this process decreases all the losses. It enables peer-to-peer transactions over the Internet, which lessens the intermediaries and their costs. Due to the decentralized system, it eliminates the delays in online payments.  

Fast Credit Reports 

Banking and financial institutions store transactional information of their users to analyze their monthly transactions. Now this can generate a credit report with the help of analyzing data. However, this data is not that secured as centralized servers are used for this and anyone can hack the server and get all the data.

Using the blockchain in the system can enhance security as it decentralizes the data and stores it in a separate place to protect the data from any fraud. Secondly, it has a robust security algorithm that can protect the data as needed to identify the verification protocol. And the most existing thing is that blockchain technology can audit the credit report and help the user get it at a much faster speed.

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Global Payment Options

The blockchain network is entirely Internet-based and does not require any other specific setup for operations. Due to digitalization, the user can access the data and can do transactions from anywhere all over the globe with just private keys and the account’s public.

The cross-border transaction is also very smooth with the help of the blockchain network as it is an internet-centric system which makes it flexible for global transactions. 

Conclusion 

Coming to the end, we know that blockchain technology use cases are revolutionizing the fintech industry and are not towards the end at any moment. The benefits of blockchain are clear as it removes the barriers of cost, speed, and many more factors of financial transfers. The security is one of the major factors which can also be enhanced with the help of the blockchain implementation.

To learn more about the topic or how to develop a fintech mobile app, contact the best ewallet app development company, Octal IT Solution, today and get detailed advice from our experts.