India has emerged as one of the key global fintech hubs and has created a huge room for fintech startups. Especially COVID- has accelerated the growth of fintech industry, enjoying record investments and skyrocketing adoption of its services. With industries shifting into digital platforms, venture into app-based operation by the fintech industry was vital. The finance sector has provided the comfort of all operations at your fingertips, in addition to secured logins and complete access to financial data.
While these app-based operations reduce the time and work, secured transactions, safety from fraud as well as transparency to safeguard from any misconduct are doubtful. This is where blockchain technology comes to benefit, revolutionizing the whole tech-based financial ecosystem.
Before going ahead, it is essential to understand what blockchain is and how that technology helps the fintech sector to perform transparency.
A blockchain is a decentralized, distributed and public digital ledger that records transactions across many computers so that the record cannot be altered, with effect from data in the past, without the alteration of all subsequent blocks and the consensus of the network.
This mushrooming technology is growing and making its mark in every field including healthcare, real estate, agriculture, food and especially fintech.
It is now evident that blockchain technology has the capability to transform regular financial processes into entirely transparent procedures built on secure and efficient transactions. The fintech transactions on the block do not require a middleman, capable of establishing peer-to-peer networks, fast transactions and complete transparency.
Not only does this technology provide transparency, but through it, users can recapture full control of their wealth, thus helping to pave the way for a fully democratized landscape.
With potential to make the financial services industry more transparent, less susceptible to fraud and cheaper for consumers, blockchain focuses on reducing the risk of financial institutions and providing secure, encrypted data that are safe and unaltered. This helps the industry to focus on machine driven intelligence and AI-powered decision making.
With increasing new-age customer segment, digital wallets, digital lending or digital payment have created a new market segment and this ecosystem can be well managed by blockchain. Blockchain integrated digital wallets are protected by private keys, while also possessing their very own unique public address to allow them to send and receive payments with others. With the usage of blockchain technology, wallet holders holding private keys are the sole owners of the assets, unlike traditional currency where there are no banks that take the responsibility of holding money.
Trust and identification has always been a challenge; blockchain, as a technology, will play a key role in getting the entire manual, paper-based, time-consuming, expensive and inefficient process of maintaining up-to-date records of customers through digital KYC. Digitization provides an immense opportunity to maintain accurate information and make transacting on the internet a process with genuine trust between parties. Key segments that makes the task easier for everyone are around customer consent, data theft and identity theft.
With the market moving towards borderless transactions, financial institutions are able to focus more on faster and more straightforward payment options, owning to its lower cost of operation. This further brings the total TCO lower by regulating the resources required to authorize payments, and making it convenient for international payments
Hence blockchain technology will revolutionize the fintech industry; the digital revolution has taken the finance industry by storm and still is coming with new advancements every single time. Fintech has grown to modernize traditional financial institutions and blockchain technology has aced this process. The data privacy advantage of blockchain has been building up the much-needed trust between the users and providers in the fintech industry.
With increasing focus on the payments segment and closely followed by securities and trade finance, blockchain will focus on evolving complexity and delivery timeframe; this will improve the operational efficiency of financial institutions.
