Recent developments in the financial niche include the advent of digital currencies and the fintech industry. Cryptocurrencies like bitcoin went up and down in terms of value but the future expectations are good.
Fintech is an emerging industry where there is a vast variety of tools, solutions, and platforms to digitize financial operations. Not just the automation but also the security in today’s online systems are thanks to fintech. For this reason, the global market value of fintech is expected to grow to $382 million by 2027.
What is Fintech?
Fintech refers to the tools and techniques for digitizing financial services, including web-based and mobile applications like ICR app and other software. The purpose is to make financial processes convenient for users. Leading fintech companies (Braintree, Acorns, Morningstar) have already been capturing the market with top-notch financial services.
Online banking apps are also provided by fintech, and allow banks to easily monitor customer activities. Customers are also provided the convenience of
checking account balance, making transactions, and transferring funds.
Evolution of FinTech
Considering the details, fintech has actually come a long way. Although the terminology is new, the basic concept is the same as used in the invention of ATMs for easing transactions. Now, all well-established financial institutions are making fintech companies their partners. To stress the significance of fintech, it’s safe to say that online payments and other banking processes were easily conducted even when the Covid-19 pandemic caused global damage.
Cryptocurrency & Fintech
Cryptocurrency is clearly being adopted by worldwide businesses, and market trends show growth and stability in digital currency rates. Cryptocurrencies were actually intended to be used in fintech, and the security and speed of crypto transfers have made them quite popular.
Efficient Money Transfers
Lack of trust in digital currency transfers raises issues in some cases, but cryptocurrency, in general, is now gaining traction. The whole population of the world using mobile phones is a clear indication of the potential of cryptocurrency.
The decentralized nature of digital currency eliminates the need to go to banks as everything is handled through mobile apps. Moreover, the speed and efficiency of crypto transfers can never be achieved in the traditional financial system as there are always delays of some sort.
Just like other institutions, the fintech industry also becomes a victim of fraud every now and then. This is because the implementation of security systems is considered a painstaking task. Digital currency provides the facility of online platforms and secures data using blockchain technology which is very difficult to crack.
Blockchain technology refers to decentralized secure data storage designed to prevent data breaches and theft. The design comprises interlinked blocks with no single entity in control. The blocks are extended and joined to newer blocks when maximum capacity is filled. In this way, data is secured on individual ledgers.
Transaction information is also stored in a similar way, where a peer-to-peer network constantly makes calculations for validation. Complete information including the transaction details, the when and where, and who made the transaction are recorded in the chained-together blocks.
Advantages of Cryptocurrency
Due to the advantages of cryptocurrency, it’s already being adopted by airports, mobile service providers, and airports as payment.
Ease of Access
The ease of making payments and accessing account information makes cryptocurrency a popular choice compared to traditional banking. Simply using smartphones, customers can send and receive payments, eliminating the need to rely on banks. Also, customers that find it difficult to go to banks or use bank accounts can benefit from additional crypto services
In smart contracts, blockchain technology helps in meeting the terms and conditions and securing legal contracts by transferring funds directly from client to client.
Cryptocurrency and The Banking System
Already established banks can help cryptocurrency users to improve the security for customers by providing ways for safely transferring digital currency. This reduces the fear in customers concerning the breach of their information. Merging digital currency with the banking system can thereby reduce criminal activities to a great extent.
Although digital currency transfers follow a different procedure compared to the traditional banking systems, KYC compliance still applies. Complying with these guidelines helps in avoiding illegal transactions and scams by carrying out customer due diligence. Blockchain technology also enhances KYC verification and secures banking data for customers and other stakeholders.
In conclusion, cryptocurrency is already adopted widely and many banks are presently considering mergers of cryptocurrency and the traditional banking system. It’s no secret that the fintech industry and cryptocurrency are transforming the financial world, opening new doors for opportunities and bringing security like never before.