Blockchain in Fintech Development Services
Fintech is transforming the financial industry, and fintech development services that develop blockchain technologies in this area now have a significant advantage. The speed and scope of these changes will depend mainly on the users and how quickly and easily they will embrace this new economy. Finance is one of the industries that was the first to adopt IT, and ordinary users began to benefit from it. Fintech is an innovative technology that companies can use to improve their work. It is worth noting that the blockchain plays an important role in this.
In its current state, the banking system has a number of shortcomings related both to the need to rent a large number of expensive premises for office work and to keep dozens and hundreds of specialists responsible for communicating with clients. All these costs are ultimately passed on to the clients themselves. Otherwise, the profitability of the banking business will be close to zero.
But the main problem of the classical banking system today is the absolute dependence on SWIFT – the international system of interbank settlements.
However, this problem can and should be addressed. For example, through the use of blockchain technology. Its active use will give credit institutions several significant advantages over competitors:
- the possibility of making fast and cheap transfers;
- transition to electronic document management;
- increasing the level of security by introducing an additional document verification tool.
Fintech and Blockchain: Use Cases
Let’s look at blockchain use cases that can bring real benefits to the financial sector:
- Reduce transfer and transaction costs in minutes. The transfer of funds or assets has always been a labor-intensive process. Sometimes sending just $100 can take forever. With blockchain implemented in fintech applications, sending money, no matter the amount, is much faster. Moreover, blockchain-based fintech applications can significantly reduce transaction costs by enabling direct P2P transactions that eliminate any middleman.
- Safety. Blockchain allows users to remain anonymous and also guarantees the protection of personal data.
- Smart contracts. These are self-sustaining protocols implemented in computer code on a blockchain network. Smart contracts allow you to perform transactions without the participation of third parties while providing a high level of security.
- Global network without geographical restrictions. Since the blockchain is based on the Internet, it does not require any special configuration to work. With decentralized systems, blockchain-based fintech companies can turn global transactions into fast, conventional protocols with the only requirement being internet access.
- Audit protocols. Building blockchain-based applications will enable fintech developers to create first-level audit trails. Blockchain provides all the data needed to conduct a fast and secure audit of transactions, providing transparency at the highest level.
As for the promising directions for the development of blockchain technologies, the following trends are the most attractive for investors.
Track the supply chain in real-time, with secure and trusted information about every intermediate step. This is what matters today more than ever.
For example, blockchain makes it easy to track compliance with all conditions of transportation and storage when delivering vaccines. Moreover, this can be done not only by the state or a medical institution but also by the patient himself.
In a broader business sense, integration with AI allows you to predict in advance the demand for any group of goods and select the best ways to deliver them to the end consumer.
Today, IBM remains the leader in developing solutions for this blockchain application. Today, the giant is negotiating cooperation with several major pharmaceutical companies. This is necessary to participate in the launch of a pilot project on the logistics of medical supplies.
In the press, the concept of “blockchain” is often mentioned in conjunction with such words as “public” or “decentralized”. Yes, this is true for public registries.
But in recent years, corporate blockchains have received a boost in development, which implies control over them by only one owner. As a rule, this is a company that provides services such as Blockchain-as-a-Service, or a proprietary blockchain platform developed exclusively for its own needs. Many major players in the financial services market have gone this way.
Analysts call the main consumers of innovations the spheres of healthcare, various services, and production. The main efforts in this direction will be concentrated in the following segments:
- simplification of launching and joining the blockchain network;
- solving problems of scaling existing products and their optimization;
- transfer of assets from one corporate blockchain to another during transactions.
The development of the NFT market will continue in the coming years. Yes, many people only hear about multimillion-dollar deals for the purchase of digital art by collectors. But in reality, the scope of technology is much wider.
For example, NFT is the role of confirmation of ownership of land or cars. Today, this process takes quite a lot of time: it has to be spent on monitoring numerous registries. With NFT, you can get a list of previous owners in minutes or seconds.
Stablecoins and CBDCs
The volatility of cryptocurrencies is one of the biggest barriers to regular business use. The development and implementation of new stablecoin projects, free from the shortcomings of existing ones, remains an important task for the blockchain industry.
CBDC – as one of the options for the implementation of stablecoins – is now being intensively studied by most financial regulators of the countries of the world. The state, not wanting problems with unstable cryptocurrencies, is well aware that their introduction into the financial system is only a matter of time. So the creation of a stable national digital currency – as an option to lead this process – looks the most acceptable. Therefore, work on the study of CBDCs, their impact on the national economy, and the search for and elimination of possible problems in their circulation, receive the full support of the entire power of the state apparatus.
It is obvious that it is new projects that need more modern and innovative solutions, and it is they who will implement blockchain technologies:
Fintech startups have been able to offer their users simple, fast, and seamless access to financial services – a whole new experience compared to legacy banking. Ultimately, blockchain will gradually replace traditional finance.
Now the main application of blockchain, which we can see in many areas, is smart contracts. They allow without human intervention to safely and impartially perform any of the actions described in the contract. This can be transactions, starting or stopping processes, maintaining standard performance, or agreed obligations.