From centralization to decentralization; how blockchain-oriented fintech can benefit the financial sector

From the looks of it, one of the burgeoning tech blockchains is expected to have an impact across sectors, including finance. Insights from a study conducted by Market Research Future, a market research company, have shown that blockchain within the fintech market will be valued at $31.4 billion by 2030, generating a compound annual growth rate (CAGR) of 47.90%. “Blockchain’s influence on the fintech sector can play a key role in increasing privacy and reducing risk while conducting transactions. With no intermediaries involved, customers can complete transactions at a reduced cost. As the financial industry begins to adopt blockchain, the potential to provide trusted and transparent transactions will become widespread, Prashant Kumar, founder and CEO, weTrade, a cryptocurrency startup, told FE Digital Currency.

As stated by experts, blockchain has the ability to digitize the trading ecosystem with increased security and efficiency, reduction in fraudulent practices and human error, and overall drop in counterparty risk. A blog by International Business Machines (IBM) Corporation, a technology company, mentioned that 54% of banks surveyed said that transformative technologies such as blockchain, digital commerce and online trading platforms are priority development areas for future growth. “From a productivity point of view, blockchain’s intervention will allow the banking system to be automated within a given set of variables, so that they can operate 24×7. Moreover, it can enable transparent governance, as transactions will be traceable on the blockchain,” said Anndy Lian, Head of Digital adviser, Mongolian Productivity Organisation, a government organisation.

For now, market behavior suggests that blockchain-enabled fintech can benefit the banking and finance sector through a faster procession of digital securities, helping digitize financial instruments to ensure connectivity between products, services, assets and holdings. Data from Jupiter Research, a digital technology market research firm, advises that blockchain deployments will enable banks to realize savings on cross-border settlement of transactions of up to $27 billion by the end of 2030, through cost reductions of more than 11%. “Blockchain has demonstrated disruptive economics, to create cost advantages against different technologies. I believe financial institutions will recognize that using the DLT protocol (Distributed Ledger Technology) will help them save billions of dollars over the years,” said Amanjot Malhotra, Country Manager India , Bitay, a cryptocurrency exchange.