How Blockchain and Fintech are Changing the Game

Fin-tech is an industry revolutionising at the speed of light, quiet literally! And what’s the factor bringing about this change? Well, primarily it’s BLOCKCHAIN TECHNOLOGY. Shifting needs of consumers and businesses, starting with the development of credit cards and ending with the launch of mobile banking had started to bring some change in Fin-tech, but blockchain has the capability to clear the threshold and be the epitome of revolution.

To begin with, let’s talk about what blockchain actually is. Blockchain is a distributed digital ledger maintained by a network of nodes wherein each node has a copy of the ledger, and any changes to the ledger are verified and recorded by network consensus. Since, each transaction is verified by multiple parties, the ledger becomes tamper-proof and transparent. With its decentralised nature and ability to ensure secure transactions, and emphasis on innovation and customer experience, fintech is the ideal partner to bring this technology to the masses and revolutionise our experience in financial sector.

This article will help us set foot into this revolution. We will look at the benefits of combining blockchain and fintech, as well as the exciting possibilities that result from their collaboration. We will look at how blockchain technology can transform fin-tech solutions ranging from identity verification, lending to smart contracts. We will look at the advantages that this combination can provide to consumers and businesses, such as increased security, efficiency, transparency, and cost savings. Buckle up for the ride!

Alternative lending in 21st century

The benefits of blockchain technology are significant for the alternative lending sector in particular and for online lending as a whole. One of the most significant characteristics that can bring about significant changes in the sector while eliminating the various frauds that have up until now plagued it is the PUBLIC DECENTRALISED LEDGER. Real-time monitoring of fraud databases, payments, and disbursements is possible with this decentralised ledger. Each transaction that goes through the blockchain is given a distinct timestamp, making each transaction immutable and lowering the possibility of data distortion. Using the "hash" assigned to each transaction, only the participants to the transaction who possess the key to it will be able to read the contents. Some businesses are digitising collaterals like land titles and centralising them for public access as the next step in integrating blockchain into online lending, as more lenders search for ways to reduce risks throughout their value chain.

Identity Verification: Simple Fraud Prevention

Fraud and money laundering have been our topmost concern in finance. Blockchain eliminates the threat of identity theft, which is an important aspect of online lending-related fraud. Online lending has eliminated the need for the lender and borrower to ever meet in person, as was usual in traditional banking. The former has eliminated the need for lengthy, physical verification, resulting in shorter loan origination and funding cycles. But, in the absence of a thorough physical verification, how confident can the lender be in the information provided by the borrower? In this case, combining blockchain decentralisation principles with the procedure for verifying identity can aid in the creation of tamper-proof digital IDs, which can then be used as an electronic signature for verifying all transactions and documents.

Smart Contracts: The Financial Contracts of the Future

Smart contracts are blockchain-based algorithms that execute when certain criteria are met. They are often used to automate the implementation of an agreement so that all parties can be certain of the conclusion right away, without the need for an intermediary or additional delay. This makes them a faster and more efficient method of processing financial transactions. As more tokenization, KYC, and insurance use cases are discovered, smart contracts in finance continue to expand. Smart contracts are used by financial organisations to substitute digital tokens for actual assets. Along with IoT devices, the insurance and agricultural industries utilise smart contracts. They can be used to automate everything from simple payments to complex derivatives contracts, reducing the possibility of errors and fraud while maintaining transparency and security so that we can effortlessly manage our financial needs.

Conclusion

The financial realm is no stranger to evolution. It has undergone continuous metamorphosis in order to keep up with fluctuating consumer and business needs. The integration of leading-edge technology into everyday life holds promise for transforming society. In light of this, the partnership between the masses and fintech which prioritizes innovation and delivering exceptional customer experiences appears particularly ripe with potential.