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When we are talking about disruption, we imply the integration of technological developments that can allow us to change the way we approach ordinary processes. One the best examples is the streamlining of transactions, which became one of the main features distinguishing fintechs from traditional banks thanks to blockchain.
Fintech companies that are widely integrating blockchain technology into their operation definitely have an advantage among their competitors. They are moving forward with a faster speed, as they offer a solution to the problem that has been there for years now – lack of transparency and high concentration of black box solutions from the financial services providers. The complexity of intermediary chains, high costs and time-consuming operations have been frustrating customers worldwide. Media is spreading information about innovation on a daily basis, but what’s the point if this innovation is not being integrated to enhance the daily lives of users? In the meantime, traditional banking institutions are still here, as they remain more credible and trustworthy in terms of operating in line with customers rights and government regulations.
Blockchain is often talked about in various contexts, but let’s focus on how its application by the fintechs could improve their value proposition, attracting more customers and leaving competitors behind. According to a research done by PWS regarding financial services, circa 77% of fintechs are going to be working with blockchain by 2020. Banks are also viewing blockchain as an opportunity rather than threat now and brainstorming on the most optimal and efficient ways to integrate it into their operational pipelines. Meanwhile, the blockchain market itself is growing at a steady pace and is expected to reach $7 million by 2022.
The main use blockchain will find in fintech surely relates to creating a seamless and comprehensive journey, which will also result into a reduction in costs and better user experience as opposed to the burden of bureaucracy that is still carried by traditional banks.
Blockchain will come to eliminate the inefficiencies that exist in the banking sector, mainly due to its complex ecosystem, and better satisfy the needs of modern corporate and private clients. Another improvement will be the reduction in financial fraud and cyber-attack rates, which are the issues that have been corroding the system for years now. Fintechs will become able to safely store and exchange data through a decentralized network, avoiding any potentially unpleasant situations.
The financing that fintech startups are receiving opens various opportunities to leverage the power of blockchain in the sector. The disruption of the global financial ecosystem continues and increases the abilities of the new entrants to create products and solutions that will interrupt the existing order of things. Despite such rapid pace, the innovative progress is being closely monitored by the regulatory institutions in order to avoid any hazardous situations that could emerge with new techniques and platforms. Regulations are naturally evolving, destroying the strict barriers that existed before, as big banks and other financial organizations begin to evidence the potential that new technology has to revolutionize the industry. The latter is being widely adopted across the banking industry in order to bring digital services to the highest level of quality they have been at, prior to this moment. The competition will continue to increase, pushing the stakeholders of the world of finance to continue improving their products and value proposition to the customers, whose are also becoming more and more demanding.