Blockchain app development for new-age fintech solutions allows for more open, inclusive, and secure corporate networks, shared operating models, more efficient procedures, lower costs, and new goods and services. It allows for the issuance of digital securities in less time, at lower unit costs, and with greater levels of customization.
As a result, digital financial instruments may be customized to meet the needs of investors, extending the market for investors, lowering issuer costs, and lowering counterparty risk.
The technology has evolved for enterprise-grade application during the previous five years
It exhibits the following benefits:
- High-Performance
- Security
- Trust
- Programmability
- Privacy
- Scalability
Blockchain Development for Fintech Solutions | Advantages
The following are some of the advantages of blockchain development for fintech solutions for businesses:
Genuineness and Scarcity
Digitization provides data integrity and allows for asset provenance and transaction history to be stored in a single common source of truth.
Customizable Capabilities
Governance, compliance, data privacy, identification (KYC/AML traits), system incentives, and elements that control stakeholder engagement (for voting and other rights)—all of these may be integrated into the assets themselves.
More Efficient Processes:
Increased automation improves the overall efficiency of the business. It allows for real-time settlement, auditing, and reporting, as well as a reduction in processing times, the risk of mistake and delay, and the number of stages and intermediaries needed to attain the same levels of assurance as traditional processes.
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Economic Efficiency
Reduced infrastructure, operation, and transaction costs result from automated, more efficient procedures.
Reactivity of the market
Compared to standardized securities, digital securities allow for more personalization and may be issued in less time. Issuers can design unique digital financial instruments that are tailored to the needs of investors.
New Markets and Products
Asset transfers that are secure, scalable, and quick, fractionalized ownership of real-world assets, tokenized micro-economies, and more.
These advantages add up to more accountable and transparent governance systems, more efficient business models, enhanced stakeholder incentive alignment, more liquidity, cheaper capital costs, lower counterparty risk, access to a larger investor and capital base, and access to all other digital financial instruments.
Also, Read | Stellar Blockchain | An Open-Source Infrastructure for Fintech Solutions
Blockchain for Fintech Solutions | Emerging Applications
Augmented Insurance Processes
Property and casualty insurance claims are vulnerable to fraud, and claim evaluations can take a long time. Data verification, claims to process, and distribution may all be made more secure using blockchain, resulting in considerable processing time savings. It enables you to:
- Authenticated paperwork and KYC/AML data reduce the risk of fraud and make claim evaluations easier.
- Smart contracts are being used to automate claim processing.
- Automated parameterized contracts that payout when a specific risk occurs.
- Insurance payments are disbursed automatically.
- Tokenized reinsurance marketplaces to make policy reinsurance more accessible in open marketplaces
- Move away from a conventional broker and relationship-based systems, markets
Also, Read | A Definitive Guide to Exploring Blockchain In Insurance
Reduced Identity Challenges in Financial Services
Although digital fraud and identity theft are not frequent, they do exist. According to a news release from Javelin, 6.64 percent of consumers were victims of identity theft in 2017.
Following greater regulation, banks and fintech businesses have begun to develop know-your-client and anti-money laundering measures. Of course, this necessitates a large amount of paperwork, which slows them down. Verifying the identification and completing the internet purchase might take weeks. The difficulty is exacerbated by the extensive and non-standardized documentation required for these verifications.
Financial institutions should, as a result, establish a blockchain-based system. The user just has to authenticate his or her identification once in this system. They are then issued a verification document that allows them to perform transactions from anywhere on the planet. They may also use it to manage personal information, exchange information, log in without a password, and digitally sign any document.
Also, Read | Advancing Identity Management with Blockchain Technology
Streamlined Financial Reporting and Auditing
Auditing is a procedure for checking the finances and identifying any irregularities. This is a time-consuming procedure that takes several man-hours at most banking locations since it verifies the organization's and government's regulations and compliances. Data integrity is the most important factor for most firms when it comes to auditing.
Blockchain makes auditing much easier. It provides for efficient data storage and updating by immediately entering entries into the ledger. Furthermore, because the ledger is absolute and genuine, corporations have unparalleled proof of fund movement in real-time. This also helps them to keep their records in better shape. Instead of gathering data from several sources, they may audit using the general ledger.
Blockchain may also be used to validate transactions that haven't been logged by users. Your firm will be able to bill clients without the need for manual intervention thanks to smart contracts and automatic invoicing solutions. Furthermore, because blockchain records are irreversible, there is no uncertainty about their transparency and veracity.
Also, Read | Blockchain Applications in the Financial Services Industry
Simplified and Cost-Effective Cross-Border Payments
Blockchain allows for decentralized money, which means you may make payments and transfers without going via a bank. It can also aid with faster and easier payments because money transfers from one account to another are less expensive.
Payment processing rates are also lower since blockchain transfers do not require third-party consent and banks do not need resources to transmit cash.
Blockchain technology will assist to enhance the global cash movement. Normally, banks impose a remittance fee of 10-15% of the amount sent. This is reduced to 3% when using blockchain.
Blockchain payments are also safe since all parties in a transaction must approve the transaction before it can take place, and anybody may verify the updated ledger afterward.
You may also utilize P2P transfer to transfer cash because you don't need a third party. Banks can compete with fintech firms and provide their own fintech-related services as a result of this.
Also, Read | Blockchain for Cross-Border Payments | A Detailed Guide
Strengthened Trade Finance
Even today, most trading businesses need a significant amount of documentation. Not only that but payments and transfers are delayed if you trade over the weekend. Because merchants utilize trading systems all over the world, there is a need to create a system that allows all parties to readily inspect and validate the trade.
The trading system should guarantee that all participants have accurate entries and that users may make adjustments in a secure manner at any time.
This is exactly what blockchain is supposed to do. Using a generic ledger can enhance the entire process.
And, because data is updated in real-time, the flow of information is quick, making it simple to make business choices and policies based on it. By lowering shorting risks and boosting accountability, such a strategy enhances the whole lifespan of the trade
Also, Read | Blockchain in Trade Finance for Significant Transformations
Closing thoughts
In the field of fintech, blockchain development has a lot of potential uses. There is also a slew of blockchain startups developing cryptocurrencies and blockchain apps in the hopes of providing rapid and transparent finance services. Despite its drawbacks, blockchain has the potential to transform the way banks conduct business by enabling quicker payments, quicker audits, and more comprehensive identification.