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Blockchain And Crypto Must Reinvent Themselves to Remain Relevant in The Fintech Industry

Blockchain And Crypto Must Reinvent Themselves to Remain Relevant in The Fintech Industry

The fintech industry has experienced ups and downs in the past decade that brought about a plethora of solutions looking to simplify and provide banking and financial services at breakneck speed. While this narrative has featured in a majority of publications, discussing the triumphs of the burgeoning fintech industry, a closer look will, however, disclose that blockchain and crypto technology have been at the forefront of this paradigm shift.

That said, the goal of this article is not to focus on the performances of both technologies in the last decade, but to explore what the new decade has in store for them. Here, we will highlight trends that will help crypto and blockchain retain their place at the heart of the fintech conversation.

How Far Has Crypto and Blockchain Impacted the Financial Services Market?

It might have taken some time for enterprises and investors to notice the innovative edge that blockchain and crypto bring into the financial services industry. Nonetheless, the speed at which these technologies have established themselves as viable fintech candidates is remarkable. With bitcoin leading the way, crypto emerged as an invaluable addition to the payment network market, as it offered a myriad of features lacking in the traditional payment solutions. The same is true of blockchain that combines cryptography, smart contracts, and an immutable ledger to bring about a transparent and secure way of distributing financial services.

All in all, both technologies have done enough to maintain their relevance in the financial services market, even as the new decade promises to stretch the limits of fintech offerings with the blockchain revolution. However, for crypto and blockchain to retain their position at the echelon of the fintech sector, they must reinvent themselves to cope with the challenges that questioned their viability in the last decade.

How Can Blockchain And Crypto Reinvent Themselves in The New Decade?

Resolve Existing Flaws
It is imperative to find lasting solutions to Issues like regulatory uncertainties, security vulnerability, and siloed operations, which have plagued the efficiency of these technologies for so long.

For one, the nascency of fintech products, coupled with the complex models of crypto technology, has made it a tad difficult for regulators to box crypto solutions under a regulatory framework. Hence, nations that are receptive to crypto technology are beginning to see the need for the creation of crypto regulatory frameworks. While this is a given, other countries have chosen to impose existing laws, governing the operations of traditional financial companies, on crypto fintech firms, which often stagnates growth.

As such, some crypto firms sometimes circumvent regulations – a decision that almost always comes back to hurt them. Also, some have moved to relocate to countries with crypto-friendly regulations, while others continue to look for ways to collaborate with regulators to create conducive environments to do business. The last option is the most viable, especially now that crypto fintech solutions are pushing for global adoption.

Also, the recurring issues with siloed operations that limit the interoperability of blockchains must give way for crypto technology to reach its potential in the new decade. Interoperability, which has propelled the explosion of traditional payment and remittance network, has been lacking in the crypto industry. And it has begun to have negative impacts on the establishment of the technology as a global alternative to fiat currencies. To this end, crypto payment networks must provide cross-chain payment services to ensure that their blockchains can share data and resources with other blockchains seamlessly.

Offer Investment Freedom Through Tokenization

The concept of tokenization is not a new one. Nevertheless, it is yet to garner as much buzz as we had expected. Seeing that tokenization is a phenomenon that makes it possible to distribute the ownership of assets, it is, therefore, safe to say that it would eventually overrun the investment landscape. People are coming to terms that tokenizing their companies is a viable way of attracting investors. This assertion is evident in the number of established firms and startups subscribing to the STO and IEO funding mechanism.

For example, Wolfs Group, an established investment and consulting company, has introduced its native token that would allow holders to share in its revenue. Ironically, Wolfs Group is heavily invested in the fintech industry as well. It has acquired the Ferpay platform, which is an FCA licensed payment solution that would also implement a cryptocurrency and fiat gateway in the near future.

Funding campaigns like the one Wolfs Group has incorporated is becoming popular in the investment world. Thus, it is probable that the influence of blockchain and crypto would continue to grow in this sector.

Disrupt the Banking System Through Decentralized Finances

Decentralized Finance, stylized as Defi, has become the latest crypto model that would directly target the banking industry. This concept proposes the complete elimination of the intermediate responsibilities of banks. Hence, it automates banking processes without inputs from intermediaries, which bodes well for the unbanked. Also, the establishment of Defi would surely reduce the cost of financial services and speed up the time it takes to complete or authorize banking processes.

We have seen this narrative play out in the emerging crypto lending sector, where Defi platforms are offering loans with reasonable interest rates. Take Nuo for instance. It provides a P2P network that enables fast access of loans at rates lower than what conventional lending platforms or banks offer. That said, it is going to take immense effort, on the part of DeFi system facilitators, to convince the average individual to choose blockchain solutions over banks.

Final Thoughts

Crypto and blockchain successes over the years have ensured that the world would continue to explore new ways to disrupt the financial industry. And so, it is safe to say that these technologies would reinvent themselves over the next decade to stay relevant in the fintech conversation. The points raised in this article are the likely ways blockchain and crypto can fuel their dominance in the fintech industry.

10 Jan 2020
The views and opinions expressed in blogs are those of the authors and are not the official policy or position of ICObench. Any content provided by our bloggers or experts is of their opinion and they are fully responsible for it. ICObench is not legally responsible for the blog's content.

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