Most banks are now using blockchain technology to create more efficient methods of recording data.
In 2020, it reached a market share Alblukhan in banks 29.7%.
Since blockchain allows data to be updated in real time, it is a more cost-effective way to record transactions without interference from outside parties.
Here are the main use cases of blockchain in fintech:
1. Digital ID:
Security is one of the most important aspects of online financial services.
Banks have to ensure that the transactions they undertake are safe and authenticated.
Most banks have their own security algorithms to confirm a user's identity.
But for clients, they often run into big hassles as they have to undergo multiple security checks for simple tasks like checking their balance, transaction history, etc.
Banks sometimes impose the performance of KYC tools that further annoy customers.
If you have accounts with different banks, following different security protocols can be confusing, time-consuming, and often frustrating.
To counter this, blockchain technology can be used.
With blockchain, a digital persona can be created instead of relying on those made by banks.
The digital ID can also be reused for identification in various facilities and locations, which will save time and effort.
In the sense that blockchain technology helps to speed up identification and verification, with the ability for customers to rely on it to transfer money, share data, and perform various banking activities.
Since data stored on blockchain networks is more secure, fintech organizations prefer it more.
2. Trade:
Up until now, most businesses require a lot of paperwork.
Not only that, if you are trading over the weekend, payments and transfers will be delayed until business days, given that sellers all over the world use trading systems, there is a need to create a system in which all participants can easily verify the trade.
The trading system should ensure that all participants have correct entries and that users can safely make changes anytime they want.
Blockchain is designed to deal with exactly this.
Blockchain can improve the entire process, by updating information in real time, and supporting a rapid flow of information, all of which contributes to and makes it easier to make business decisions and policies accordingly.
Such a system also improves the entire life cycle of a trade by reducing the risk of short selling and improving overall transactions.
3. Financial payments around the world:
Blockchain technology supports decentralized currencies, which means that there is no need to go through banks to make global financial payments or various financial transfers.
Cryptocurrencies can help in making payments faster and easier and are cheaper as they do not require high fees to transfer money from one account to another.
Since blockchain transfer does not require authorization from an external party, and banks do not require resources to transfer funds, the payment processing fees are also lower.
Banks usually charge 5 to 15 percent of the amount transferred as transfer fees.
With blockchain, this percentage drops to 3%.
In addition, financial transactions on the blockchain are safe and immune to the possibility of being hacked by third parties.
4. Investment and lending:
Most investment bankers require a credit history and financing details prior to investing, meaning that investors need to make sure their money is in the right hands.
Cryptocurrencies and blockchain technology make it very easy to validate accounts and provide a complete history of financial transactions.
Even without investment firms, there are many ways in which startups can leverage blockchain to generate investments.
Where startups can rely on blockchain to raise capital through individual investments by submitting IEO or STO offers and other new offerings.
Finally:
There are many interesting applications of blockchain in the financial technology field.
There are many companies specialized in the field of financial technology that are researching practical uses for the blockchain and developing it to match its use cases.
These companies also seek to promote blockchain technology, because of the practical benefits they have found in terms of saving time and money, raising security efficiency and other positives.
