Over the past few years, substantial growth of the cryptocurrency market turned it into a trillion-dollar marketplace. One of the reasons for the fastest growth crypto market is blockchain technology. The platform ensures promising security, traceability, and reliability for long-standing business models. Considering the significance of blockchain in the crypto exchange platform, various industries in the finance sector are eagerly adopting the future of financial transactions.
Also Read: Future of Blockchain in Banking
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Blockchain technology in finance is a decentralized platform that records transactions in blocks. For this reason, it’s becoming a path to faster and cheaper transactions with automated smart contracts like incredible features.
Today, it’s undeniable that technology is spreading leaps and bounds, still, there are many more ways for widespread adoption. Because presently, the platform is adopted by only a few financial institutions. If you want to upgrade your system with the power of blockchain technology, you are at the right place.
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To understand more about blockchain in finance, let’s deep dive into the ocean.
9 Prominent Uses of Blockchain Technology In The Finance Sector Like Banking
Blockchain is a smart and powerful technology getting into almost every industry – banking is not an exception. Let’s get straight to understanding how blockchain technology is revolutionizing the banking industry.
- Payments, Especially Cross-Border Payments
When it comes to blockchain technology in the banking sector, both commercial and central banks prefer to take advantage of end-to-end data security features. The encrypted data ensures fast payment processing and digital currencies. The trend also enhanced cross-border payments that were only powered by western union and Swift networking.
Also Read: Use Cases Of Blockchain For Cybersecurity
Best of all, blockchain technology eliminates third-party authorization, which significantly boosts the speed of cross-border payments. It also helps in reducing remittance fees from 5-20% to 2-3% only. Hence, cross-border transactions become faster with an affordable price.
- Stock Exchange and Share Trading
Generally, trading occurs when third parties are involved in buying and selling of stocks and shares. These third parties are known as stock traders or brokers that charge a commission on each transaction. The trading process with traders always becomes complicated as it involves more than 3 days to fulfill orders. But the decentralization of blockchain technologies removes all these complications. The peer-2-peer networking platform enables flawless trading from systems all over the world.
Blockchain technology removes all the hurdles that affect transaction performance and fill gaps. Only a few steps are required to complete a transaction, and every piece of information is recorded in blocks without intermediaries’ assistance.
Related to Trading and Stocks: How To Build An App Like Robinhood?
- Trade Finance
Blockchain technology plays a crucial role in the trade finance sector. You might be wondering why we are talking about trading again. As discussed above, stock exchange trading. Bear in mind that there is lots of paperwork involved in the digital era, such as bills of lading, invoices, letters of credit, and more. Banks manage these with an order management system, still, it consumes time to complete paperwork only.
The use of blockchain technology in trading can streamline the process of trading. The system has an approach to removing duplicate copies and updating single data with real-time access. You can also reconcile the statement without much effort.
- Digital Identity Verification
Financial transactions are impossible to proceed with without identification, especially when it’s online transactions. The system asks you to complete face-to-face checking (via video calling), authentication (for secured login), and authorization ( a proof of clients’ intentions). Banks have to repeat these steps in traditional technology when a customer is looking for new services. But the power of blockchain technology ensures the re-use of identity verification.
Once your users get registered on blockchain technology, they can avail of any service without repeating the registration process.
- Syndicated Lending
Syndicated lending refers to providing loans to individuals from a group of lenders. The money lending process could be complicated as it can take upto 19 days to complete. Still, the banks face many issues regarding customer authentication. It was hard to conduct KYC. Therefore, money laundering acts were common.
The implication of blockchain technology supercharges the process of lending. Decentralized ledgers can distribute the tasks such as KYC and AML to a single customer block. It helps in reducing fraud. If the bank is taking advantage of enterprises’ blockchain development technology, other banks can also take advantage of it with icing on the cake benefits of time and cost-cutting.
- Accounting, Bookkeeping, and Audit
There is no sphere that revolves around paperwork than accounting. The reason behind strict regulatory norms and regarding data validity and integrity. Therefore, accounting is another domain that requires the power of blockchain to record transactions safely. High-security blockchain integrated software and applications ensure a smooth double-entry system to streamline payment & receipts transactions. Enterprise blockchain technology also ensures writing transactions directly into a joint register where others can see your transactions but cannot amend them without permission. Besides that, smart contracts can be used to pay invoices.
- Credit Reports for Businesses and Individuals
Blockchain technology plays a pivotal role for small businesses and individuals to get instant loans based on credit history. It may take time for lenders to review the borrower’s history earlier. They had to spend more time and investment with third-party apps to accept sensitive data. Now the blockchain provides more tools that allow borrowers to build accurate credit reports with transparency and data security.
Blockchain-based credit reports also help in reducing the cost & complexities of generating reports or data verification. The best thing, ownership no longer persists to central authority only.
- Hedge Funds
A hedge fund investment partner is also regarded as a fund manager or group of investors. These investors participate in investment trading more than ordinary investors intending to maximize return and minimize risk. The trending platform provides decentralized crypto hedging where fund managers control traditional crypto hedge funds.
- Crowdfunding (ICOs)
Crowdfunding involves providing funds to a large number of people that require a small amount of money. The perfect industry for finance blockchain technology offers the fastest transactions and fundraising methods. How? ICO tokens are similar to equity exchange. Investors buy these coins to raise funds by selling coins in the crypto exchange market. Securing your business transactions with blockchain technology serves faster and better results.
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Build the full-stack blockchain solution on Polygon that combines the finest of Ethereum with an attractive feature set.
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Perks of Adopting Blockchain in Finance
Choosing blockchain networking in finance serves many benefits. Some of them are as follows.
The security norms of Ethereum blockchain technology in application ensure secure application code that cannot be tempered or hacked, making it impossible to hack or manipulate. Besides that, consensus-based architecture eliminates data intermediaries, single-point failure, and third-party messaging intermediaries.
Data in blockchain technology employs a high level of transparency with the privilege of data available for everyone at any time. But the transactions are recorded in such a way they are difficult to change or cheat.
A transparent and immutable ledger makes it easy for users to access, manage and collaborate data that reach an agreement.
Blockchain technology supports the creation and execution of smart contracts with software that automates the logic behind building trust and efficiency.
The networking platform provides various tools for data privacy, such as two-factor authenticity, multi-factor authenticity, the biometric and facial expression security to build privacy and confidentiality.
The private and hybrid blockchain technologies ensure thousands of transactions in one second. Polygon Blockchain Technology is one of the prominent examples of the lightning speed of more than 65,000 transactions in a second.
Integration of blockchain technology with business targets can achieve high scalability features.
How To Build A Blockchain Financial Service Application?
One cannot avail of the benefits of blockchain technology in finance until it has not been implemented in blockchain technology. So, here we have a simple plan to take imperative steps.
- Select Public or Private Blockchain: Public and private blockchain are designed to meet different customers’ needs. But if you are seeking to implement complete control over sensitive data or looking for a more scalable option, then choosing a private blockchain could be a worthy decision for your business.
- Enterprise blockchain frameworks are designed to meet specific business requirements. Our experts recommend you go with the most trusted permissioned hyperledger blockchain technology. The networking platform only permits users to see and access your business information.
- Look for a hosting provider: Once you have done with the right choice of the blockchain network, go with the appropriate hosting provider for your selected network. Like for Ethereum blockchain, Amazon can help you. To know more, you can take our blockchain technology consultancy services.
- Error-free smart contract development: Employ an error-free blockchain smart contract feature. Make sure it must be thoroughly tested and reviewed with blockchain code audit features for the flawless functioning of conditions.
Hope you have learned how the blockchain industry is reshaping the existing finance sector with end-to-end data security. Banks and other financial institutions are shifting to a new normal and setting benchmarks with the fastest trading functionalities. Adopting it in your business serves fruitful results in no time. Most importantly, the power of smart contracts ensures only transactions that fulfill certain criteria.
So, if you plan to secure your platform with blockchain technology, schedule an appointment with our experts. We serve clients with:
- Blockchain consultancy services
- Customized blockchain development
- Writing codes, editing, and updating smart contract
- Initial Coin Offerings platform development
- Asset-Backed Digital Tokens development services
- 24*7 customer support system
- Platform maintenance services