How is Blockchain Disrupting the Fintech Industry?
Fintech is becoming a widely known term as more financial institutions jump on board with automated banking options that allow users to conduct financial transactions from anywhere. Whether it’s mobile deposits, mobile wallets, or electronic transfers, it’s easier than ever to make financial transactions any time of day or night and from any location.
There’s always the risk of a lack of financial security, though, as hackers get better at getting into systems and hijacking important information.
Enter blockchain – the disrupter that isn’t ruining fintech, but making it even more secure.
How Blockchain Helps
Blockchain helps fintech companies gain trust. When a majority of consumers are used to conducting bank or financial transactions in person, it’s hard to convince them to move to an online space where security is unknown.
Fintech companies often don’t have the resources to develop highly securitised systems like you’d find at a traditional bank. Blockchain changes that. It’s inexpensive and trustworthy. Since blockchain is a series of records that are highly securitised and encrypted, they have a higher level of security.
Blockchain makes the entire fintech industry more secure and transparent – the two factors most people want out of a financial service.
Blockchain is Decentralised
The number one factor that makes blockchain trustworthy is its decentralisation. Rather than storing data in one place, putting all information at tremendous risk of theft and corruption, blockchain decentralises everything.
There isn’t one entity in charge that if it had as slip-up would cause chaos. It shares data in a way that can’t be altered (aka hacked). It’s the best way to create trust between entities whether multiple financial institutions or consumers and financial institutions.
Blockchain is Faster
Blockchain can also manifest financial transactions at a much faster pace than traditional methods. Without any ‘middlemen’ the money exchanges hands quickly, even when you’re sending money across the world.
The transfer speed also makes it cheaper to send money worldwide. With faster transmission, there are fewer expenses involved.
This is true whether you’re transferring money or assets (such as buying or selling stocks). Eliminating the middle man cuts down on costs and makes things go faster – which is ideal in the fast-paced investing world.
Will Blockchain Change Fintech?
The real question is will blockchain change fintech for good? While it’s ideal and many fintech companies are on board, it will take years for all companies to join forces. Just like fintech is still fighting its challenges to become mainstream, blockchain will do the same.
Everyone needs to keep doing their research and discovering new ways blockchain and fintech can work together to benefit not only the financial services industry but the end user too. With higher levels of security, faster transmission of assets, and more chances to do what you want with your money, fintech, and blockchain joining forces could be just what the world needs to streamline and securitise the financial industry.