How Crypto Revolutions in the Financial Industry Link to Modern-Day Conceptions of Fintech
The financial sector experienced turmoil in the past decade. We don’t have to hand cash or credit cards to our taxi drivers anymore as we can use an app instead. Furthermore, we can easily send money to our friends and family via Payoneer and Paypal, never leaving the comfort of our homes. What’s more, today almost 50 percent of people exclusively use digital channels for their financial needs. For all of this, we have to thank fintech. More so, fintech was able to disrupt traditional, bureaucratic and slow financial systems by implementing innovative money transfer processes such as mobile phone payments.
Almost simultaneously, cryptocurrencies were able to profoundly influence the fintech sector, disrupting how we transfer our funds, make purchases or even raise money—and this trend doesn’t have any signs of stopping. It will only continue to grow, causing further disruptions to the financial sector.
What Is Fintech?
Financial technology, or fintech as we most commonly know it, describes a process in which new technologies are improving, streamlining and automating the use of financial services.
At first, fintech was primarily used to improve the technology behind established financial institutions. Now, fintech includes several sectors and industries, ranging from education to fundraising, as well as development and use of cryptocurrencies.
To summarize, fintech is a term we use most commonly to describe a variety of financial activities ranging from mobile banking to fundraising, without the help of other people or institutions.
Fintech and Modern Banking
It’s quite certain that crypto banking will soon become an integral part of the financial industry due to its ability to revolutionize traditional banking methods.
Crypto banking is a process which has integrated cryptocurrencies into traditional banking functions. Crypto banks are platforms, or to be more precise, they are applications that cryptocurrency holders can use to store their crypto assets, conduct payments and perform other financial actions.
Unlike traditional banking that has centralized systems, crypto banking and cryptocurrencies are entirely decentralized. What’s more, they offer services that go beyond what we can get by conventional models, providing greater efficiency and security, less paperwork, and improved transparency.
Considering the aforementioned factors, it’s no wonder many banks are exploring the possibility of implementing their cryptocurrencies. One of the main reasons for that is the possibility of having a stable, non-influenced cryptocurrencies. What’s more, cryptocurrencies are much cheaper to manage and have fewer transaction costs. To add the cherry on top of the cake—cryptocurrencies are easier and faster to manage, and they will give banks total control over their monetary policies and financial regulation practices.
Tracking Transactions With Fintech and Cryptocurrencies
Crypto and fintech will soon become inseparable because crypto is safer than traditional banking services. Money laundering, fraud and theft are a reality to anyone involved in some sort of financial services. However, cryptocurrencies might be an antidote to these economic pain points. The clue lies in cryptocurrencies’ ability to provide a detailed trail of how certain transactions occurred during a specific period of time. This is how we’re able to have full access to the identity, background, and nature of each transaction.
The use of cryptocurrencies means smooth money transfer, which further proves the fact the future is crypto. The fintech sector is about making fast and more efficient money transactions across the globe, and the use of cryptocurrencies can make this happen. Traditional money transfers are frequently stalled by physical currencies, tedious bureaucratic bank procedures, and complex exchange rates. Using cryptocurrencies, banks will be able to cut costs and streamline their fund-moving process.
Cryptocurrencies make markets more competitive, and fintech will want to catch that train. Existence of the competition is one of the main preconditions for specific sectors to thrive, and that’s no exception when we’re talking about fintech technologies. Fintech technology such as online banking, trading platforms and blockchain technology investing and navigating international markets became much easier. That’s why, in the future, we can only expect the adoption of fintech technologies by various industries.
Getting Rid of Third-Parties
Cryptocurrencies will get rid of the middleman. One interesting Talisman article suggests that cryptocurrencies will be used for settling “self-executing” contracts, eliminating the need for third-parties such as lawyers and stockbrokers and avoiding potential tampering and mistakes on written legal documents. Blockgeeks.com introduces a convenient comparison of smart choices with vending machines. Just as we take Snickers from a vending machine, we will be able to drop a bitcoin in the ledger, and whatever document we want will be sent to our account. Furthermore, those ledgers use encryption technology, offering us increased protection from hackers.
When we see everything awaits crypto, and how far fintech has come, we can rightfully say those two terms will be used interchangeably in the future. Faster money transfer, safer transactions and seamlessly easy service await.