A little more than a decade back, when Blockchain started to make its foray into the fintech sector, the industry was on the verge of a total collapse. To get back on track, the industry was contemplating a transparent yet reliable system. Blockchain emerged as a solution. Its natural propensity to streamline issues that, otherwise, attack the core like a Hydra, was a deal-maker.
Now, after percolating across industries for over a decennium, the Blockchain in the fintech market is showing no signs of slowing down. Experts argue that a crossing of USD 6700.63 million by 2023 would be child’s play.
So, what will bolster the growth?
Before going there, let’s do a quick tour of what Blockchain is.
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What is Blockchain?
Blockchain is a type of data management system that includes complex cryptography to bolster cryptocurrencies and boost other decentralized applications. It facilitates auditing, which makes it the choicest preference for many companies. This decentralization is to make the system nearly impossible to breach.
The first one was Bitcoin and it took digital transactions to the next level where there was no central bank to control actions.
The practice of it in fintech companies has become common. In 2017, around 77% of companies had Blockchain in their mainframe. It is startling how in such a short period, it came, it saw, and it impacted the market.
Reasons Behind Rule
The architecture of technology has features to trigger its uptake. And it is not just unidirectional.
1. Curbs Cost
Trading companies or applications, mediums of a transaction, and intermediaries are quite common in online payments. But hey have a price tag on all their services.
And, they do have side-effects,
- They slow down the process
- Introduce additional charges
Undoubtedly, at the end of financial years, these little costs burn a hole in the pockets of companies. Now, imagine a time without these price tags and swifter procedures. Not just, the profit margin will soar high but credibility will rise, inviting more users and investors; a win-win time for the company.
2. Reduces Theft Issues
Knowing clients and implementing anti-money laundering procedures are quite common now for banks. The idea, driving the design, tries to reduce identity theft. But it also means paperwork and missing the deadline.
With blockchains, proving identity is a one-time issue. This means faster use and no need for a password to complete transactions. In fact, while adopting the technology, fintech companies contemplate these two factors.
3. Simplifying Global Transactions
Flexibility is often a hindrance when it comes to global transactions. But Blockchain technology banks on the internet and needs no specific setup for operating. Users’ accounts public and private keys are enough to provide an opportunity to conduct a transaction from any part of the world.
4. Promotes Clarity
Blockchain follows a structure that allows no deletion of older reports and is decentralized. This means trade documents are easily available, a boon for those coming in for auditing. As a plus, it cuts time and cost of operation and simplifies access to reports by providing a single spot for all reports. Banks gain a lot from this.
How COVID-19 will Impact the Market?
The pandemic impacted industries without any special consideration. Many faltered. Many were left bare with rusty structures. Only handfuls are getting a chance to leverage the moment and Blockchain is one among them.
Blockchain in fintech stands to gain from a sudden surge in online transactions as
- People are avoiding crowded spots. They are ordering things for home delivery
- E-commerce brands stand to benefit from it. It has the chance of witnessing a hike in online transaction
- Governments are trying to build awareness about contact-free dealings to reduce the spreading of the disease. Blockchain in fintech will gain from it
- Consumer behavior is set to change making this mode of payment a part of the new normal
- Since 2017, 29%of people found Bitcoins more trustworthy than banks. This number will rise post-COVID-19
Developers are capitalizing on the COVID-19 crisis and are building formats to support recuperation after the crisis gets over.
- In July 2020, Ant Group, announced the launch of a new blockchain brand, popularly dubbed as AntChain. The company declared that its operations would cover shipping and cross-border remittances, support 1 billion user accounts, and initiate process 1 billion transactions every day
- The same month also witnessed the launch of Mastercard Accelerate program. It has its focus on startups and FinTechs to ensure quicker growth
The current crisis has flattened many industries, but it also forced those who want to bounce back into rethinking their tactics. Traditional institutions were losing clients and the COVID-19 crisis put them on the verge of obliteration. In fact, 47% of people have shown greater faith in Bitcoin than in big banks. The fusion of these two forces have started showing results in favor of the Blockchain in fintech, and it is only going to speed up from here