3.2 What Role is Blockchain playing within Fintech?

3.1 What is Fintech? shared information about a fast growing 21^st century sector that has evolved the world of Finance. At BlockUno our primary goal is to educate our readers about Blockchain, so we want to share the key areas within Fintech that could be developed further with the support of Blockchain Technology. Below we have shared four examples: 

Accountancy

Managing accounts whether it is personal, or business is a dreaded task for most, and that’s why for majority the responsibility is passed over to an Accountant or someone in the Financial sector. With this responsibility comes a number of time-consuming tasks, and we believe that Blockchain can support the efficiency of a range of tasks that fall under this umbrella. At this time, we want to discuss auditing specifically, as this is one task that requires expert manpower and a lot of time and attention. Whether you’re completing audits on a monthly, quarterly or annual basis, the amount of time it takes any individual to complete an audit is excessive, as checking every receipt and rectifying any errors isn’t a one-day task. 

Introducing Blockchain to support your Accounting tasks is likely to transform your way of working. In its simplest form a Blockchain is just a database (much more secure than your standard databases). The foundations behind Blockchain technology will ensure transactions are not duplicated and they will follow a trail one after another. All entries to the Blockchain can be separated into individual categories making it easier to organise your accounts. Auditing will be a much easier process with Blockchain as auditors can look at your financial statements and authenticate them using electronic signatures. Finally, we can’t forget the added layer of security that Blockchain offers, it is so important to make sure your Accounts are protected.

Stock Exchanges

If you invest in stocks and shares you will know that there are third parties involved to make it possible. If you are looking to sell some of your shares or invest more money you will experience delays due to third party involvement.  From regulation approvals, to the mandatory clearance it can take a minimum of 2 days for your investment to be processed and/or for your money to be received. Furthermore, for the above work to be completed customer fees are charged through commission.

Together with Blockchain, Stock Markets can transform and remove the need for third parties. As Blockchain Technology offers a decentralised approach, nodes on the network will provide the connection to ensure the network is continually live and operating. Whilst all transactions on the market can be securely stored within individual blocks and accessible to the relevant contacts.

Payments

One area within Finance that we have discussed on a number of occasions is payments and if you have read any of our previous blogs you will already understand that Blockchain aims to make payments/transactions a smooth and secure method. 

Payments are one area that many Financial institutions are analysing further and if you have tried to complete a cross border payment in your lifetime, you will already know that it is a long process, that can take up to a week. Further to this, anyone in the middle completing work to push this process through is taking a percentage as a transfer fee (dependent on where the money is being transferred to). Either way, completely unfair and as always, we have a better method with Blockchain.

Using a Permissioned style Blockchain (discussed in our previous blogs), users are able to transfer money anywhere in the world and it is going to be between 40-80% cheaper than using bank transfers. Furthermore, and the greatest advantage of all, is the fact these transactions will take seconds and the money will be in the destination/hands of the recipient without any hassle. Now, we mention it a lot but we will mention it again, if the above isn’t enough, you also have the security layers that Blockchain offers when sending your money. It sounds like a no brainer to us.

Trading

Whenever anyone completes a transaction or trades goods/services etc there are a range of paperwork documents included (invoices, letter of credit, billing etc) that in the 21^st century should be completed using digital formats. Blockchain Technology utilises smart contracts, where you can find all of this information in your traditional paperwork documents (and more) to ensure all important details about a trade are kept safe and this will remain permanent on your Blockchain with access granted to only relevant contacts. Trades will only take place when the Smart Contracts are completed, and they will be created with a criterion that must be met before the trade is processed. Not only is this a smoother, safer process but it can also reduce carbon footprints for many businesses by removing the unnecessary paperwork we mentioned above.

“Work Smarter, Not Harder”

To finalise this blog, we have shared the above quote as we feel it is extremely relevant to anyone working in the Fintech industry. Adopting Blockchain in the above areas or to support any other tasks within your to do list is going to increase efficiency and security (as a bonus). Consider the above areas and share any success stories or other thoughts about Blockchain being adopted within Fintech related tasks in the comments or on our social media.

Looking for more Blockchain Information?

We are keeping it short and sweet in regard to Fintech, however if you wish to find out more information about Fintech as a sector, head over to Investopedia. It is extremely important for all our readers to understand every area connected to Blockchain and this is why we are touching on a range of topics. Our content so far has been a journey about introducing Blockchain technology to as many people as possible, whilst showing the potential it offers by evolving many sectors and specific tasks. Stay tuned for more information as we begin a new topic related to Decentralised Finance.