Once considered solely the realm of cryptocurrency, blockchain technology has expanded its use significantly over the past few years, and fintech is rightfully at the forefront of utilising the technology.
According to a recent Forbes article, the Fintech space is predicted to be worth over £174 billion in 2023. This is thanks in no small part to the influence blockchain technology has had on the sector. Here are just four ways that blockchain is influencing fintech.
1. Enhanced Security.
One of the primary benefits of blockchain technology is the use of decentralisation – storing data across a network of computers rather than a central server. This makes hacking data extremely difficult, as it would require accessing the entire network instead of a single server.
Of course, this has benefits beyond the fintech industry – from securely sending contracts to ensuring ‘one version of the truth’ on any transactions completed using blockchain.
2. Improved Transparency.
Blockchain technology provides unprecedented levels of transparency. Every transaction on a blockchain network is recorded on a shared ledger that is accessible to all participants on the network. This removes the need for a central authority to verify transactions, as all parties can view the same information.
For fintech-based businesses, this means that blockchain technology can enable greater transparency in financial transactions, reducing the risk of errors or discrepancies.
3. Faster Transactions.
Due to the traditional set-up of bank transactions, particularly using the SWIFT system, some can take days to complete. Blockchain can significantly reduce the time as there is no requirements for third-party verification – all of the information is stored publicly and any updates are processed immediately across all nodes.
4. Increased Access to Financial Services.
The expansion of blockchain technology has the potential to increase access to financial services for people who are currently not sufficiently served by traditional banking models. The decentralised nature of blockchain means that individuals can participate in financial transactions outside of a traditional system.
This can be particularly beneficial for businesses looking to work with developing countries, where a lack of infrastructure and access to financial services can limit economic growth.
It’s clear that blockchain technology has the potential to revolutionise the way financial transactions are conducted, providing enhanced security, transparency, speed, and increased access to financial services. As the technology continues to develop and become more widely adopted, it is likely that we will see even greater innovation and disruption in the fintech industry.
