These days we cannot imagine a world without mobile devices, the Internet, AR/VR, artificial intelligence, etc. These things have become key elements of our life and have brought a high disruption to every business line. The finance sector is not an exception.
Digital revolution transforms the way how people arrange payments and access services and products across the financial landscape. The pace of changes seems to be increasing as does the urge for the finance ecosystem to react. The forces shaping this change have made us reconsider the role of the financial provider.
Financial landscape has been changed by virtue of fintech phenomenon that lies at the technology and finance intersection and forces the path and pace of changes. The latest innovation is blockchain solution having the huge potential to rock the attractive proposal of the financial sector trust concept.
What is FinTech?
The term ‘fintech’ refers to the companies that do business and use tech innovations to operate outside of traditional processes of serving their customer and offer the new ways of serving. Businesses can be divided into:
- those that apply tech solutions to alter how financial services are offered;
- those that apply tech solutions and enhance efficiency to improve the competitive advantages of the companies that offer traditional services/products.
Key Drivers of FinTech
Below we have highlighted four major drivers of the fintech growth.
- Technological advances: fast pace of price cutting technology combined with the technological developments.
- Increasing customer expectations: customers are more interested in digital services that offer improved experiences.
- Funding and capital availability: fintechs resourcing has increased significantly in the last few years.
- Governments and regulators support: fintech is proactively supported due to its potential to flourish the financial sector.
Blockchain Potential Usage in Fintech
The financial landscape is now disrupted with the blockchain-based solution. It has huge potential for the complex changes in multiple areas, such as commercial banking, risk management, trade and supply chain finance, capital markets. These areas can be an ideal place for the blockchain-based solutions to be adopted that has some beneficial actions:
- a technological leap forward;
- a boost to inclusion and growth in finance ecosystem.
Proactive companies will foster blockchain-based culture adoption that can create significant opportunities for their businesses.They should understand what threats the blockchain tech solution poses to reorganize the way of doing business and focus on blockchain solution strategic implementation.
The strategic advantages over emerging rivals should be considered, the ways of leveraging these strengths in combination with blockchain tech solution should be determined. This will lead to creating a competitive edge for your business organisation.
Also, you can read: Blockchain technology in Logistics software development
Traditional and blockchain banking comparative analysis
We have provided a comparison of traditional and blockchain approaches in banking system. As you can see below there is fraud, operational risks, transaction delay, efficiency bottlenecks, non-confidence in the traditional banking. All mentioned problems can be settled by applying the blockchain-based solution.
|Traditional banking businesses||Blockchain banking (FinTech)|
Blockchain benefits in finance
- Faster speed to achieve a real-time settlement.
- Costs can be saved by eliminating inefficiencies when opening.
- Reliability, traceability of records.
- Efficiency enhancement that helps to facilitate information and data flow.
- Enhancement in security through encryption of the blocks and the linkages between the blocks.
The key steps for blockchain tech adoption in finance sector
1. Get ready to accept disruption and fluidity across the business and economy, focus on agility, innovation, and self-reliance management style.
2. Plan and test non-hierarchical models of the companies as a part of work decentralization process.
3. Assess the potential of blockchain tech solution, search opportunities to streamline existing companies’ processes or create fresh offerings.
4. Create an investment plan to fund proofs of concept (POC).
5. Start POC on blockchain- based development, test specific user scenarios that are relevant to the financial institution.
6. Adopt a “fail-fast” approach to encourage rapid learning.
7. Share the results with your stakeholders, continue with an iterative procedure to refine your POC.
DDI Development has a rich heritage of working with groundbreaking technologies. We have a great experience and a significant presence in the financial-services industry. Our development team can help you at all touchpoints along your blockchain journey, from initial strategy through to implementation and ongoing operations. Work with DDI Development to:
- Facilitate strategy and planning workshops.
- Rapidly prototype and develop a POC.
- Host, manage and operate a blockchain environment.
Let us help you formulate, develop, implement and execute an innovative blockchain-based strategy to reorganize the way you do business to boost revenue and increase customer retention.