We are on the precipice of a new form of finance that will use a range of technologies to change the way we use and manage one of our most fundamental tools: money.
Gone are the times of the ATMs, applying for a mortgage by visiting a bank branch, or shopping with cash. Now, for many, conducting financial transactions of any kind may be a purely online experience, escalated over the past two years by the COVID-19 pandemic.
Increasingly, the future of money exists via phones and laptops. But there’s a bigger future for money, the early stages of which are now taking place. Cryptocurrency and its underlying technology blockchain are transforming our concept of money and challenging the financial institutions that currently manage it.
There’s more to Blockchain Technology than just Cryptocurrency. Blockchain technology has taken the FinTech industry by storm. This new disruptive technology is best known for powering cryptocurrencies, making it a recent buzz in the finance industry.
Governments throughout the globe also are opening up to blockchain and crypto now. So far, 83 countries are experimenting with or implementing so-called Central Bank Digital Currencies or CBDCs.
While this can be still a replacement technology that has the power to leverage several services, the FinTech industry can transform its traditional practices and upgrade to modern techniques which will safeguard the foremost important industry in society.
Here are three ways blockchain technology is set to revolutionize the FinTech industry:
Elimination of Third-Party Interference By Decentralized Finance.
Decentralized non-custodial applications can replace intermediaries by making it possible to get loans, make investments, or trade financial products without relying heavily on traditional financial entities. DeFi adopts deterministic smart contracts, which eliminate counter-party risks and cut out the prices related to rent-seeking intermediaries while improving market efficiency with real-time transparency.
DeFi supported blockchain technology is unveiling a brand new era of opportunity, disrupting established traditional value chains and structures. As financial policies and regulations adapt, DeFi is ready to massively expand.
Real-Time Transaction Settlement.
Banks can use smart contracts to settle the collateral and cash a part of a transaction at the identical time. Transaction processing, securities lending, and equity trades also can be settled on the blockchain to boost the efficiency and scalability of cross-border sales. Meanwhile, trading securities supported by digital collateral on the blockchain bring more efficient, transparent, and secure capital management, still as post-transaction equity settlement.
Secures Transactions Against Fraudulent Activities.
Blockchain technology is decentralized, which suggests nobody can access the blocks and alter them. Every single transaction is recorded on a novel node that can’t be tampered with at any point, making every record extremely secure. Having an accurate and precise record of each transaction is crucial for the banking and accounting industries.
By recording the transactions automatically, blockchain technology significantly improves the efficiency of the process and reduces the risk of transaction anomalies, facilitating a brand new system of trust.
We should all strive on innovation and thanks to the emergence of these innovative financial technologies. There is no reason to compete with these proven technologies when we can leverage them to create better ecosystems.
As you might have noticed Arival is not any traditional bank that shuts the door they hear blockchain or crypto. We know how to bank crypto-related businesses.
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