Implementation areas, opportunities & challenges.
Fintech is here to stay. Why? To put in short, fintech is
changing conventional finances using technology to improve financial services provided to end customers.
The world has welcomed the Fintech industry with open arms. The total value of the global investment into the fintech industry has grown from approximately $1B in 2008 to about $24B. Still, over the last several years, investment in fintech has been on the rise. The global market is expected to grow at compound annual growth rate (CAGR) of 54.83 percent between now and 2020.
Below you can find five conventional areas of financial services, where a significant amount of innovations occur:
- payments and money transfers;
- borrowing and lending;
- capital management;
The blockchain money (r)evolution
According to PwC Global FinTech Survey 2017, implementation blockchain in the business will not occur overnight. But the report also quotes that 77 percent of its respondents expect to adopt blockchain by 2020.
“Blockchain technology and cryptocurrencies are on the way to rewrite finance industry and drive it forward. The area is moving beyond the hype, more and more business use cases of blockchain appears and makes a success. What we can expect from future are crypto regulations for ICO market, cryptocurrency exchanges and traders. It may hurt the industry in the short perspective. But in the long run, it will bring trust and certainty and have a positive outcome for the industry.”
— Mike Rozhko, CoinLoan Business Development Manager
The Opportunities of Blockchain Adoption:
- Digital assets. Blockchain gave us digital property, that can’t be copied or stolen directly. It offered reliability that has never been available on the Internet.
- Cryptocurrencies. It’s an opportunity for individuals to have full control over their money, cutting out the third party.
- Transaction record. Blockchain keeps an audit trail of each transaction and the details of the parties involved.
- Smart contracts. They can ensure the fulfillment of obligations of both parties before the completion of a transaction or agreement. It enables peer-to-peer distributed models.
- Transaction speed. Traditional payments system is one of the most intermediated markets in the world, with lots of checks and requirements. Crypto transaction doesn’t take long. Average speed for Bitcoin network is 78 minutes, for Ripple is 4 seconds and for Litecoin is 30 minutes.
The Challenges of Blockchain Adoption:
- Regulator uncertainty. There is currently a variety of rules across different countries and regulatory agencies.
- Novel tech. Blockchain remains at a relatively early stage of development with most projects still at the start and limitations haven’t tested yet.
- Standardization. Lack of generally accepted technical standards between blockchain network designs can lead to the integration problems.
- Security risks. Blockchain has a potential to strengthen cybersecurity, but creates new cybersecurity risks as well.
- Huddle of ideas. The Crypto World uses its own vocabulary, that can be confusing for newcomers.