Blockchain and fintech are two definitions that bother IT professionals, financial experts, and digital entrepreneurs worldwide. These terms have only just appeared recently and changed the whole financial landscape of our world. They are attracting billions of dollars of investments, replacing traditional money with digital things like bitcoin, and building a whole new architecture for the financial system.
It all sounds like a passage from a science fiction book. But here are the real facts:
- Digital payments, the largest segment of fintech, are estimated to be worth almost $3,403,168m in 2018;
- The size of the blockchain market is expected to reach almost $550 million by the end of 2018.
When so much money is involved, more and more entrepreneurs worldwide are turning their heads to this topic. So we decided to take part in the discussion as well. Today, we would like to share with you our knowledge and vision for the blockchain technology for fintech. Let’s take a look at real use cases, examples and potential.
Quick Introduction to Key Concepts
Before we begin talking about the role of blockchain in financial services, let’s clarify what it is, and what the word fintech means.
For those who have been living under a rock for the last couple of years, or whose rock has no Internet connection, we prepared a quick overview of the basic definitions used in this article.
This is a distributed database. The copies of data are maintained on each computer of the specified network. Each party has access to previous entries, is able to add new information, but cannot modify existing files.
The technology got its name because of the special way transactions are grouped. They are recorded in sequence in a chain of blocks. The data is unchangeable because the blocks and connections between them are cryptographically protected.
The network is organized in a way that excludes third parties.
Yes, you got it right — fintech stands for financial technology. This is an alternative method of financial services delivery. Fintech implements cutting-edge technologies to finance. For examples, using smartphones for mobile banking, PayPass and cryptocurrency belong under the fintech umbrella.
The key goal of fintech is to make financial services more convenient and accessible.
Now, most well-established companies face the question of what technologies they need to implement to improve business. At the same time, numerous blockchain fintech startups have appeared lately to deliver even better services to the public.
But what if we connect these innovations? What does the use of blockchain for fintech give us? The use cases are fascinating, and the consequences are surprising. Now you have to be aware of them to keep your business from collapsing.
Blockchain in Fintech: Four Common Use Cases
It would take dozens of pages to describe all the blockchain financial service use cases. To save your time, let’s take a look at the most significant examples.
Blockchain for Trading
Financial operations are an irreplaceable element of any trading deal. Blockchain technology can:
- streamline the existing processes,
- update the trade lifecycle.
According to the new model, all participants of a deal have access to the same information. No banks or other intermediaries are included, as there is no need to have someone regulating the relationships between the trader and buyer.
How much money do you pay to your bank every month? And what if the required fees were eliminated? With blockchain as a part of the market, you can save your money to invest in more important things.
Because of the transparency and full constant access to the information, data management improves as well.
Blockchain for International Transactions
The legislation of many countries makes it extremely difficult to buy products from or sell products to abroad. Entrepreneurs have to deal with tons of documents, invoices, delays and customs.
With blockchain, you can get rid of all these issues, and, more importantly, you can save your money. At the moment, the remittance costs vary from 5% to 20%. Blockchain technology can reduce them considerably. Now, you can deal with a fee no higher than 3%. Additionally, blockchain transactions are guaranteed and real-time.
Blockchain for Online Transactions
The impact of blockchain on financial services is also huge when it comes to transactions between digital identities.
It is hard to estimate how damaging Internet fraud is. We face it from time to time, receiving weird emails from strangers about our estranged relatives who have left us a huge legacy. Another example is shopping online, when a user pays for a lovely product but never receives it.
It is crucial to identify the person you plan to build a business relationship with online. Blockchain infrastructure allows creating an account that works for every service provider. You register once, and can trade or buy things all over the network.
Here, it is all about trustable transactions. With one unchangeable database, you know for sure that the transaction is protected. Thus, you definitely get the product you paid for.
Service and product providers also win. Now, they do not have to worry about data protection or compensations – blockchain takes full care of it.
Blockchain for Financial Reward Programs
As you can see, the role of banks and insurance companies is going to change. On the one hand, the intermediaries will be eliminated. But, on the other hand, those institutions will get the opportunity to migrate to a new level of services. For example, they can take additional responsibilities for loyalty and reward programs. Blockchain technologies allow their profitable implementation; thus, the institutions can attract new customers and create the best loyalty programs for them.
Top 10 Blockchain Fintech Companies with Great Potential
The list of blockchain use cases in financial services could have gone on and on, but let’s proceed with some real success stories. We would like to introduce you to the top 10 blockchain fintech companies.
|Circle||Sending funds without transfer fees has been a dream for millions of users. This startup has brought it to life. The transactions are available locally and worldwide. The Circle app is almost as easy as a standard messenger, and the founders believe that it will soon be as widespread as messenger apps too.|
|Digital Asset||This is a whole blockchain-based platform for financial institutions. Here the entrepreneurs can share data in a secure, trustworthy way.|
|Propy||Have you ever had the need to find real estate abroad? The Propy startup provides information about great property and neighborhoods. It uses blockchain and is one of the greatest examples of cross-border transactions.|
|Alchemy Coin||This is a company that helps lenders and borrowers meet each other directly. The blockchain-based platform provides the opportunity to get dividends from investments and find reliable business partners.|
|Celsius Network||This is one of the smart lending apps that works nearly the same as Alchemy Coin. It’s special because it brings fiat currencies and cryptocurrency together.|
|Globalcap||During its first year, the company raised almost $800,000 in seed funding. The key goal of the founders is to extend access to global capital, and making capital raising mainstream.|
|Monetha||This is a service for retailers. It operates with fiat currencies and Ethereum and improves the online shopping experience.|
|Rentberry||The renting procedure was always a headache until Rentberry decided to change it. The rental agreement is based on blockchain smart contracts, so all processes are automated.|
|SmartLedger||This is a diamond in the financial services industry thanks to its great fund management system. SmartLedger is a one-of-a-kind blockchain based gold trading platform.|
|TraDove||Let us introduce to you the hero of the B2B payment fintech segment. It enables buying and selling crypto assets.|
Blockchain in fintech deserves great attention and huge investment. This is a chance for mankind to replace the existing corrupt and complex financial system. Currently, all we are doing is wasting time and money dealing with bank requirements. Most of those requirements were established back in the eighteenth century, and we still cannot break free from their legacy.
Do you have an idea for blockchain technology in the development of a fintech solution? Just drop us a line, and let’s contribute to the future together.