FinTech has been long associated with disruptive technologies that have now become ubiquitous in people’s daily lives from mobile banking to wire transfers. Today, several FinTech startups are leveraging Blockchain technologies, as of a result, these startups have lured more than USD700 million funds so far. As previously FinTech startups leveraged the internet to fuel financial services, today’s generation FinTech startups further augmenting services in this sector by utilizing Blockchain technology. In February alone, Blockchain-based startups have collectively secured USD66 million in private funding and became the leading industry sector in terms of fundraising.
The blockchain is a distributed digital ledger of economic transactions which uses cryptographic methods to store data. It also stores transactional data in a record well-known as blocks, where each block is connected to the previous one. In order to fuel the FinTech industry, the technology operates various services, including some major services like Cross-border payments, Increased security, and shared a digital identity. In Cross-Border Payments, Blockchain could not only help shrink transactional time to a matter of minutes from a few days, but it could also assist customers to save their data, with lowering the costs. As legacy FinTech systems utilize centralized systems that operate a high risk of getting breached, transactions on a Blockchain network are much more secure owing to its decentralized nature. In that effort, the technology also takes benefits of Cryptographic methods to add an extra support layer of security to the transactions.
The financial ecosystem is much profoundly regulated like space to restrain money laundering and other unlawful activities. That is why FinTech firms often have time and capital intensive process to ensure compliance with these guidelines. According to the research report, financial intermediaries could spend anywhere between USD60 to USD500 million on keeping up these regulations. Hence, as a distributed ledger system, Blockchain could assist financial intermediaries to access already verified customer data.