Blockchain-based smart contracts in the Fintech industry

A smart contract is a code that enforces the execution of an agreement in a digital way without paperwork or input from third parties. The simple idea behind this technology has become a cornerstone for a number of digital financial services. To explain smart contracts, let’s take a look at some of the best smart contract examples in fintech.

Registration of financial data

Banks and other financial organizations use smart contract solutions to record financial information, facilitate auditing and transfer data across organizations. For example, Barclays Financial Bank uses a smart contract approach to record changes in ownership and automatically transfer funds.

See also: A pressure to make smart contracts even smarter

Investment bank

In syndicated corporate loans, corporate customers benefit from shorter loan settlement cycles, reduced from 20 days to 6 days or less. This increases the demand for corporate loans and will subsequently help lenders generate more income. Smart contracts also help reduce operating costs for investors.

Digital mortgages

In the digital mortgage industry, smart contracts help to accelerate the processing of loan applications, which reduces the loan settlement to 5-6 days. The technology also helps to reduce operating expenses and generate greater revenue. Apart from mortgages, the use of smart contracts includes education, vehicles and student loans.

Insurance

In the car insurance sector, the combination of smart contracts and IoT can streamline and accelerate the process of insurance guarantee. While IoT sensors collect data on the driving behavior of all drivers involved in the accident, the smart contract platform automatically assigns insurance using insurance data stored in the blockchain.

Digital identity

Identity theft is one of the biggest problems in today’s world. However, smart contracts give individuals full control over the data they choose to disclose to intermediaries or suppliers of goods and services. Organizations, on the other hand, can be confident that the data recorded in the ledger represents a particular reliable customer.

Recurring payment transfers

In SaaS and B2B sectors, a smart contract can be used to enable secure transactions to be executed as soon as a particular action, event or condition is completed. For example, when the goods or services are delivered, the payment is automatically charged and transferred.

Cryptocurrency trading

In cryptocurrency trading, smart contracts enable rapid currency exchange and help eliminate trade barriers. Crypto-smart contracts are now the main driving force behind the development of digital currency. Advanced smart contract options play a crucial role in how quickly the currency receives support and spread.

Recent research from Analytics Insight names Avalanche as a rising star on the digital trading scene. Although any blockchain could issue and store smart contracts, so far, this currency has the fastest smart contract platform in history. Low transaction fees also make it extremely attractive.

The introduction of smart contracts is still underway, and now it is clear that this technology will radically transform the finances of the future.

However, the business opportunities that come with the blockchain are not just limited to fintech.