Fintech or financial technology is the use of cutting-edge technologies to improve financial activities.
Over the years, fintech has changed the way we transact online!
Financial services, as an industry, are greatly affected by security breaches, and delays. And, this is one industry that finds its customers in almost everyone. Any disruption in this industry adversely affects a large number of people. So the requirement of speed and security is crucial.
Many people don’t even know how much fintech is a part of their daily lives. They are already deriving the benefits of it in the form of Chatbots for customer services, AI for fraud detection, and biometrics for security, etc.
But, the most significant turning point in the history of Fintech is the blockchain technology. While many associate blockchain technologies only with bitcoins, and cryptocurrency, the top blockchain companies are building a wide range of applications.
So, here’s more on how blockchain is ready to shape the future of the world!
Business transactions require contracts between the associated parties. Whether it is between employer and employee, buyer and seller, vendor and supplier, all rely upon agreements and contracts.
Contracts are tricky to make and furthermore challenging to execute. And, the presence of third-party intermediaries makes the process cumbersome, slow, and costly. Blockchain is a big step forward in making contracts reliable, speedy, secure, transparent, and less expensive.
The blockchain based smart contracts have the terms of agreement programmed in the application itself. So, if a service provider is giving contractual services to his client through this smart contract, the
blockchain releases the payments as per the agreed stages and schedules.
Moreover, a smart contract does not require an intermediary. So the possibility of delay in the process due to third-party intervention is ruled out. The participants of smart contracts are verified by the blockchain directly. And to interact with the system, these participants require public and private keys. This multi-signature technology of smart contracts also makes the system incorruptible and trustworthy.
How can blockchain help in crowdfunding? Apart from the use of cryptocurrency, there are various other ways in which blockchain can support the crowdfunding process. It is very complicated and time-consuming to advertise your crowdfunding initiative aptly. And it always
faces the threat of either reaching out to very few investors or not reaching the right ones. Blockchain is a decentralized platform which helps you save a lot on the standard transaction fee charged by the popular crowdfunding platforms. Blockchain can be used to distribute virtual ownership tokens to the investors in proportion to their contribution. The ownership encourages more and more investors to contribute as per their capacity. And,
the contributors do not have to wait for the outcome of their investment as they get this assured ownership. To summarize, the crowdfunding process through blockchain is safe, transparent, and accessible. Blockchain is sure to start a new era of crowdfunding world over!
3. Digital Voting
Everyone knows what voting is. But, the process of voting is not easy. It is time-consuming, requires confidentiality, and has to be conducted over a wide range simultaneously in a given time-frame. Blockchain can make the process of digital voting easy by automatic e-verification of voters. Also, each
voter gets only one token after his verification. So, the possibility of fake voting is ruled out.
Moreover, the process of counting, after voting, has to be completed without errors. Blockchain ensures just the same!
Counting in a blockchain-based voting process is automatic and programmed. And, it doesn’t involve any external intervention. And, as already discussed, blockchain systems are very safe. We can trust these systems for data security during and after the completion of the voting.
4. Disaster Aid Delivery
Disaster aid delivery is a crucial process in the times when so many countries are persistently affected by natural calamities, and wars, etc. Many people want to contribute to disaster aid delivery; but, it is not easy.
There are various types of aid required in disaster management, ranging from recovery actions to medical facilities, and even basic amenities like food, or clothing. And, every kind of assistance is provided by different organizations especially working for that cause. So, collaboration and efficiency are the two
significant challenges in disaster aid management. The financial issues concerning disaster management can be managed effectively with the use of
blockchain. The financial part is similar to the other applications mentioned above. But, disaster aid delivery is more than just financial transactions.
The contributors require an assurance that their help reaches the needy. However, centralized networks are too cumbersome to manage. And most disaster aid activities have government as a prominent party. If other parties like NGOs have to join, they need access to the right information on time.
Using blockchain technology in disaster aid management makes interoperability between the parties easier. It gives a distributed power to the participant contributors; still maintaining the privacy element. It
also provides the necessary element of transparency which assures the volunteers and contributors that their efforts are reaching the right destination. So many times we come to know about a natural calamity in some remote country. And, we wish we could contribute financially! But, at times, we are not sure that the aid is going to the right hands.
Blockchain will hopefully remove the element of apprehension from the disaster aid management activities. And, this will encourage more and more people to contribute.
Fintech will finally be a big leap for the banking and finance sectors. And, these sectors are ultimately the heart of businesses. Banking is becoming faster day by day. Digital transactions are the need of the hour and safety will
always be a significant concern in all the digital transactions. And, blockchain is the best way to increase the speed of financial transactions without compromising on security.
No doubt, blockchain is a step towards a fairer world. Though blockchain supports financial transactions significantly, it goes further to the non-financial applications as well! Do share if you can think of another fantastic application of blockchain technology. Moreover, if you are looking for developers of blockchain applications, we are here to help!
Jin Markov is a Content Writer with GoodFirms.co, a research firm in the USA. He has an experience of 6 years and has been writing on cutting-edge technologies.
More about the fintech cases in Europe cases on Wiki.