Blockchain is one technology that has become the most revolutionary technology amongst others with the birth of the internet. What makes decentralizing currency disrupting in every mainstream industry.
Whether its fintech, pharmaceuticals, insurance, digital security, enterprise SaaS all this means “Blockchain is everywhere today”.
Even large retail banks are deploying blockchain solutions for the robustness that this technology brings to age-old systems when integrated in the right way.
According to a survey conducted by PWC on the financial services sector and fintech, about 77% of the financial services industry expects to implement blockchain by 2020.
What Is Blockchain?
Blockchain is a public record of information collected through a network that sits on the top of the Internet.
The information recorded on a blockchain may take any form, whether it refers to the transfer of money, the ownership, the transaction, the identity of someone, the agreement between two or more parties, or even the amount of electricity the light bulb has used.
Have a look at some basic principles of blockchain technology:-
In the blockchain, there is no single entity controls the data or the information because every single entity on a blockchain can access records on the entire database.
All transactions and related values are available to anyone who has access to the system. However, every user may choose to give his or her identity to others or to remain anonymous.
When a transaction is completed, the records can not be modified as they are connected to any transaction record that came before them in the “chain.” This immutability is what makes blockchain a strong base for fintech applications.
This implies that contact does not take place through a central node, but directly between peers. Each node stores and transmits data to all other nodes.
Blockchain transactions can be tied to computational logic and in essence, programmed due to its digital nature. With this users can easily set up algorithms and rules that automatically trigger transactions between nodes.
Let’s see the various applications of Blockchain in fintech?
Nowadays, All the blockchain enthusiasts are constantly experimenting with this technology to bring out new use cases and applications to address repetitive and complex problems in the fintech sector.
Here are some of the blockchain applications which are already commonly used:-
Trusted Payments Solutions
As we all know, blockchain is dedicated to enabling fast, secure, low-cost international payment processing services through the use of encrypted spreadsheets that provide reliable real-time verification of transactions without intermediaries such as correspondent banks and clearinghouses.
One more aspect that blockchain technology was originally used to fund Bitcoin’s digital currency, but is now being used for a broad variety of applications that do not include Bitcoin.
Supply Chain Financing And Management
Blockchain applications enable significantly higher turnaround times at lower cost by providing a single source of truth about key points in the supply chain, such as creditworthiness, supplier inventory levels, receipt and approval of orders, receipt of invoices and approvals, and more.
Most companies offer blockchain-powered enterprise solutions and also work with IoT and blockchain to provide end-to-end, real-time tamper-proof monitoring of products and goods that identify problems and inefficiencies in the supply chain.
We all know that blockchain technologies are commonly used for the encryption, validation, and processing of electronic records in the banking industry, as well as for the development of a KYC service for the National Stock Exchange.
Simplification Of Remittances
The main objective of blockchain remittance companies is to simplify the entire process, eliminating unnecessary intermediaries. The aim is to provide frictionless and near-immediate payment solutions. Like conventional networks, a blockchain network does not rely on a sluggish transaction approval process, which usually involves a number of mediators and requires a lot of manual work.
Secure Digital Regulatory Process
Blockchain is used to keep track of the steps required by the regulations and the immutability of blockchain lends itself to the application of the conformity proof-of-process. Recording acts and their results in a blockchain will create an audit trail for regulators to check compliance.
Eliminate The Dark Tactics Of The Stock Market
Blockchain helps to eliminate stock fraud, processing time and fees, naked short selling, as well as commissions from all intermediaries.
Blockchain can eliminate inefficiencies by automation, which also reduces costs, lowers entry barriers and expands the market base.
Disrupting Digital Insurance
Through enabling policyholders and insurers to monitor and control physical assets electronically, blockchain technology can codify business rules and automate claims processing through smart contracts, while offering a permanent audit trail. Insurance companies and entrepreneurs are seeking to use blockchain technology to prevent insurance fraud, electronically monitor medical records, and more.
Faster Processing Speed
The spreadsheet could make it possible to link both parties to financial trading in real-time in order to process the transaction more rapidly.
For example, if you are using another bank’s cash machine (ATM) today, that bank will contact your bank to make sure that you have enough money in your account before dispensing the cash.
If both banks were using the same blockchain ledger, the bank would be able to disburse the funds immediately without waiting for authorization.
Eliminating Audit Trails
The clarity of information and the permanence of documents make it almost impossible to change or manipulate data so that banks no longer have to maintain duplicate transaction audit trails; the transaction log is the audit trail.
Major financial corporations were persuaded of the potential of blockchain to drive new changes in the financial services industry. There is also a prospect of digital currencies.
Although the Fintech industry is delighted with blockchain, it will take a few years to become a mainstream financial model.
As with any emerging technology-Blockchain poses some obstacles that need to be tackled in order to fully leverage its potential in the financial industry.
And it’s clear that Blockchain is still in its growing phase, it still has a lot of opportunities to explore.
Also Read:- What Real World Problem Does Blockchain Solve?