Blockchain-Bringing the 'Fin' back to Fintech
Fintech is a 21st-century technology aimed at making financial operations easy and faster. Fintech caught the attention of banking sectors in its earlier days but lost its momentum with time. It regained attention after the emergence of blockchain technology. The system aims at decentralizing data management while making it more secure and convenient. Blockchain gained popularity with the emergence of Bitcoin cryptocurrency in in 2008. For example, R3 is a company, which uses the technology to create a decentralized ledger for faster and reliable financial operations. As a result, R3 created the Corda blockchain platform whose goal is to replace the traditional banking architecture with a decentralized technology. Traditional banking architecture is outdated and leads to delay in operations as well as high operational costs.
The financial sector has a significant impact on the global and domestic economies. Traditionally, the banking sector used to have much control over its operations. This provided extensive power on policies and banking operations. However, regulations have changed with time, and the banking sector operates under strict regulations. These regulations affect their activities and revenues thus limiting their capabilities. The emergence of blockchain technology could loosen these regulations by bringing a decentralized system. Using Fintech, banks can automate most of their activities making them faster and cheaper. Traditional banking architecture has trouble adapting to new regulations, which mostly lead to a change in their policies. Frequent amendment of policies causes interfere with customer loyalty, banking operations thus affecting revenue and growth.
Banks have been at the forefront of finding a system, which could optimize their operations and increase revenue. However, most of them do not work or end up bringing less than expected. As such, some banks are very reluctant to make significant advancements in technology. However, R3 aims to bring an architecture, which is reliable efficient and cost-effective. Corda has blockchain technology although operating quite differently. Instead of verifying a pool of transactions, the platform handles every operation individually, which makes it more secure. However, even the Corda operation have not been adapted accordingly despite its approval by Goldman and Sachs.
Adapting Fintech in different sectors has proved reliable and efficient, in a way that some countries have massively integrated it in different fields. Every technology takes time to adapt parties wait for early adopters to give their feedbacks. This explains why blockchain is still in development phase despite being popular for almost a decade. Very few companies have integrated blockchain on a full scale. I fact, earlier adopters are startups which are still in their early phases. Application of modern technology like blockchain is the ultimate solution; it could give banks more control on markets and allow them to evade strict regulations or even astronomical taxes.
Fintech is the best way for banking sectors to improve the efficiency of their activities, embrace the future and promote growth. Startups like R3 have a significant impact on the adoption of blockchain technology into the banking sector. Using their Corda platform, the company aims to replace traditional banking architecture with a decentralized system. This is the best way to simplify operations, improve regulation efficiency, improve liquidity capital and minimize fraud. The system is among the best in utilizing blockchain technology on a full scale and in a cost-effective manner. The banking sector should work in line with tech startups, which aim at improving the overall financial systems.
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