Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Top five use cases for blockchain in fintech
ITProPortal | Malcom Ridgers | Nov 5, 2020
Blockchain is guaranteed to change the way we operate. Since blockchain is a decentralized ledger with strong focus on cryptography, security, and privacy, it’s ideal for banking applications and fintech.
Most banks are now using blockchain technology to create more efficient ways to record data. In 2020, the market share of blockchain in banking was 29.7 percent. Since blockchain allows you to update data in real-time, it’s a more cost-effective method to record transactions without intervention.
See: Blockchain: legal and regulatory guidance report
1. Digital identity
Banks have to ensure that the transactions they are carrying out are secure and validated. Most banks have their own security algorithms to confirm user identity. But for customers, they often are a huge hassle as they have to go through multiple security checks for simple tasks like checking their balance, transaction history, etc.
Banks sometimes also perform KYC (Know Your Customers) tools that further annoy customers. If you have accounts in different banks, going through different security protocols can be confusing, time-consuming, and frustrating.
To counter this, you can use blockchain. With it, you can create your digital persona instead of relying on the one made by banks. You can also reuse your persona for identification at different institutes and locations, which will allow you to save time and effort.
See: From Voting To Social Media: What Does The Future Hold For Digital Identity On The Blockchain
2. Trading
The trading system should ensure that all participants have correct entries and that the users can perform changes securely at any time they want. Blockchain is designed to handle exactly this. It can improve the whole process by using a generalized ledger.
Since information is refreshed in real-time, the flow of information is fast, and it is easy to make business decisions and policies based on that. Such a system also improves the whole lifecycle of the trade by reducing shorting risks and improving accountability.
3. Payments across the world
Blockchain supports decentralized currency, which means that you don't have to go through banks for your payments or transfers. It can also help in faster and easier payments since it costs less to transfer money from one account to another.
Since transfer through blockchain doesn’t require third party authorization, and banks don’t require resources to transfer funds, the payment processing fees are also less.
Blockchain will help to improve the flow of currency all around the world. Normally banks charge 10-15 percent of the amount transferred as a remittance fee. With blockchain, this comes down to 3 percent.
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