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Blockchain is a real differentiator that is enabling organizations to expand their offerings and thrive in the digital age. Read on to know how blockchain technology is shaking up the financial services industry.

Sure enough, blockchain technology has been rewriting the rules for tomorrow’s financial services.

You might think that’s quite a bold statement to make, I beg to differ.

Working closely with some of the finest digital disruptors in the financial services space has made me realize one thing – staying technologically relevant (in this context; embracing blockchain) should no longer be an afterthought but a priority.

That reminds me of this quote by Chris Skinner, author of Digital Bank:

“Ignoring technological change in a financial system based upon technology is like a mouse starving to death because someone moved their cheese”.

The trillion-dollar reason to build trust in blockchain

Blockchain has come a long way, from being introduced as the operational backbone of Bitcoin to making its entry into boardroom discussion of bankers and industry experts.

Today blockchain is gaining prominence as a groundbreaking technology, capable of disrupting the $22.5 trillion financial services industry as a whole.

From simplifying payments to tokenizing traditional securities, blockchain technology is removing layers of inefficiencies and making the global financial ecosystem interoperable and easily accessible.

PWC reports that over the next decade, this public ledger technology can boost the global GDP by US$1.76 trillion.

How blockchain is disrupting payments and the financial services industry to its core

Let’s quickly take a look at five applications of blockchain that are shaking up the finance industry.

1. Facilitating simpler payments and real-time transactions

By setting up a decentralized ledger for payments, blockchain technology cuts down the need for verification from third parties, speeding up the process of moving money from peer-to-peer. Incorporating blockchain-based payment solutions to execute cross-border payments makes it secure, seamless, and fast, almost bringing in a borderless experience.

Globally, we’re witnessing a mainstream adoption of blockchain in the payments industry – Central Banks are looking to leverage Central Bank-issued Digital Currencies (CBDCs) to enhance their nation’s payments ecosystem.

It’s also interesting to see players like BitPay enabling merchants on Shopify and WooCommerce to accept bitcoin as payments.

2. Tokenizing traditional securities

Blockchain has introduced interoperability in global capital markets. Smart contracts and tokenization of traditional securities like stocks and bonds are redefining the stock markets.

3. Transparency in trade finance

Blockchain-based trade networks are enabling people to trade faster and at much lower costs than ever before. By switching from paper to electronic bills of lading, blockchain technology is bringing in security and transparency in the trade finance industry, not to mention building trust among trade parties globally.

4. Improved control in customer KYC

Blockchain technology is making it easier to transfer customer information between financial institutions by storing this information in decentralized blocks.

5. Security in the lending space

Lower interest rates and increased security are what blockchain-enabled lending has to offer. By removing the need for gatekeepers from the loan and credits industry, blockchain makes the processing of loans a lot more efficient.

Blockchain is winning heart-share in the financial services landscape

Blockchain has proved itself to be a real differentiator enabling organizations to expand their offerings and thrive in the digital age.

FinTechs are taking the lead in capitalizing on blockchain’s decentralized network and building solutions to capture the customer’s mindshare.

Smart contracts, digital identity management, and enabling seamless transactions in a matter of a few seconds, are just some of the many ways in which blockchain is revolutionizing the FinTech industry.

This tweet from Urs Bolt (Product Manager Digital Banking at ti&m) is food for thought for the banking industry.

All I can say is with transparency, decentralization, and indisputable collaboration capabilities, embracing blockchain has now become the need of the hour for FinTechs and financial institutions alike.

Stay Updated: Follow me on LinkedIn to know all about emerging payment trends, the latest scoop from the financial industry, and top management goals.

T M Praveen is a highly accomplished global payments leader with over 20 years of experience. A veteran in the payments industry, Praveen has immense wealth of insights to share in payments innovations, emerging technologies, FinTech, and financial services.

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