Blockchain promises a new horizon for the fintech market by improving privacy, reducing risks, and reducing transaction costs. Thereby promoting a digitalized trade ecosystem with a substantial increase in efficiency and security. And experts worldwide argue as below as to how Blockchain helps the financial industry.
Blockchain Rising Contribution In The Fintech Market
According to recent research by MarketResearchFuture, the Blockchain within this market will value at a whopping $31.4 billion in the next decade with a 47.90% CAGR. To give a fundamental perspective, Dataintelo reports the market size was just $280.2 million last year (2021).
India’s blockchain networks are similar to most global ones, and most of these international networks have operation bases in India. Thus, with the introduction of a CBDC and reduction of the one-dollar fee, India’s finance sector will heap enormous rewards for years to come.
What Can Blockchain Do To The Future Of The Fintech Market?
According to IBM, burgeoning technologies like digital trade, online platforms, and Blockchain are the primary areas for development towards future growth. Blockchain offers decentralization and digitalization of ledger to store financial transactions worldwide. This allows companies to speed up the process, thereby cutting costs.
On the other hand, with increased transparency, fraudulent activities become less probable. The main advantage is the absence of intermediaries like government entities and banks. And, thanks to the encrypted block linked via cryptography, anyone with verifiable access can view any transaction in a network. Thus, the chances of breach go lower.
Blockchain’s Role in Increasing Productivity
It is possible to create a 24/7, fully-functioning banking system using Blockchain. If one can automate its intervention within a few variables, it becomes possible to improve automated banking, which is transparent and reliable. Global digital asset exchanges like PayBito already offer unique crypto-banking services to their customers.
Digital Securities Procession
Another advantage of Blockchain to the banking sector is the ability to increase the speed of digital securities procession. It becomes conceivable to completely digitalize the financial instruments, thereby increasing connectivity between the products, holdings, assets, and services.
Since the DLT can decentralize the database and update it in real-time speed, it becomes easy for the entire market to view the data simultaneously. This process increases market confidence and streamlines automated dividend payments. The automated process also reduces the risk of failure of unsettled trades. With further development, out-of-hour trading in small sizes can become routine in the future, opening doors for small investors. Such a digital securities front can create a digital format for art, properties, and media distribution rights.
Geo-political boundaries no longer capsize businesses. Any small-scale business can match with the prominent players to compete worldwide. Blockchain technology can help players and banks save considerable money in cross-border transactions in such a scenario.
According to Juniper Research, this technology can save $27 billion by the end of the next decade by enabling an 11% cost reduction. Moreover, the Blockchain can create automated finance compliance checking to identify money laundering, and digital identity verification, saving around 50% of current costs in these genres.
Blockchain can create a network of market participants (buyers and sellers), logistics entities, insurers, and financial institutes to help connect, streamline lending processes, access insurance information, credit rating, and more. Such a network would reduce the entry barrier for new market participants.
All this can become a reality only if every governing entity in this whole trade ecosystem acknowledges the DLT protocol. The Distributed Ledger Technology makes it possible to create high-end transparency among trading entities, network participants, and banks. Every particular transaction is recorded with a timestamp and a unique signature on the Blockchain. Once a transaction gets recorded on the chain, there is no way of altering or deleting it. Thus, every transaction can be verified if you have the proper permission.
Blockchain has proved its worth by creating cost advantages by combining the benefits of several technologies. However, overcoming the stigma and fear of the unknown is crucial to saving billions of dollars in the upcoming years. The key to removing the fear and stigma is proper regulations from the early stages of development.