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The Fintech Side Of Cryptocurrencies - Really?

Blockchain

July 28, 2020 | 

848 Views | 

JOHN K MWANIKI | 

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During the early days of the internet, intangibles were the new thing. Most people loved the idea of sending and receiving paperless communications. Today, advancement has shifted to digital assets. These assets are stored in encoded formats within a distributed network called the blockchain.

Lately, blockchain has shown the potential to change lives in many ways. These disruptions could affect the way you transact or even the way you use some equipment. In the next part of this post, we will look at the fintech side of crypto.

What is the impact of cryptos in the fintech landscape? But first, let's recap the history of tech innovations in the financial sector.

The first fintech dates back to the 1950s. During that time, the first batch of credit cards entered the market. The ATMs, online services, and other bank cards soon followed. But the major turning point in the financial technology market came in 2008.

During the financial crisis, a majority of players in the industry got disappointed with the classical financial system. This annoyance led to the emergence of several tech startups in the financial sector. Luckily, investors welcomed the new wave and started pouring money into the new ventures. 

To say the least, the development in this space over the last few years has been disruptive. The entry of the cryptocurrencies has taken some people aback. They have to re-examine their survival strategies. Going to the future, cryptos will influence the direction of financial technologies

While we may not experience a full switch from fiat to cryptos, the two systems are likely to coexist. For instance, the latest innovation in the financial sector has been the conversion of cryptos to fiat and vice versa. In fact, most exchanges have issued their branded debit cards. With these cards, users can buy in retail outlets as they would with their regular cards. 

The robust security has inspired the rapid adoption of crypto cards. With this arrangement, criminals won't siphon funds out of digital wallets and cards.

Crypto Is Shaping the Fintech Space

As blockchain technology matures, there will be more applications in the financial industry. Already, technology has made its way into forex, exchanges, and payments.

Based on the latest numbers of businesses using fintech, we can conclude that cryptocurrency has the support of the majority.

Due to this technology, the current financial landscape has simplified operations for many. This group can now expand on the back of trading with cryptos. Besides crypto simplifying payments and trading, it offers new investment opportunities.

It has also opened up space for more innovation in fintech. As you know, digital currencies can remove intermediaries, which often complicate innovations.

Meanwhile, fiat will continue to lose value, as more businesses adopt cryptocurrencies. Apart from this, the chaotic traditional finance will also push away potential customers. Most of these customers will find alternative forms of borrowing. And this is where fintech comes in to connect the bridges. 

Several fintech firms within the banking industry are carrying out experimental projects. Some of them are trying to figure out how to explore a distributed system. This is the same system that powers most cryptos.

The lowered risk of fraud makes blockchain more appealing to fintech firms. After all, technology is also fast and more efficient. It eliminates the need for intermediaries. As a result of this, most cryptos have gained traction within the fintech landscape. 

Even the usually reluctant large corporations are beginning to see their value. How could they deny the speed and security offered by crypto-based systems? Wall Street bulldozers like JP Morgan and Bank of America are ready to join the bandwagon. 

Who knows? Conventional payment systems backed by fiat may soon exit the market. As you would expect, their exit will be a boom for cryptocurrencies. In fact, some fintech startups are exploring the idea of offering crypto-based loans. More firms might also start providing working capital via cryptocurrencies. 

Seba Crypto AG is among the first batch of fintech to try the crypto-loan initiative. If it succeeds, the Swiss financial company will be the world's first crypto-driven bank. If more companies follow this direction, it will be easier to trade fiat with cryptos. 

Institutional markets are also carrying out their own trials with cryptos. In fact, most financial professionals think that blockchain is necessary for the industry. A study conducted by Greenwich Associates supports this professional observation.

As if that was not enough, NASDAQ is planning to use this technology to transform its operations. 

The Future of Cryptos Is Not Set on Stone

fintechs and cryptos

Cryptocurrency and blockchain are still new technologies. So, we can't predict where it will head us to. In any case, a huge section of the financial sector is still traditional. But we cannot deny the development that has happened over the past decade.

The current pandemic might also play a role. If the situation continues, the future will more likely switch to cryptos and fintech. As such, the people who follow current trends are likely to profit as things evolve. 

In the meantime, companies can continue exploring what they can achieve with cryptos. For instance, they can experiment with ways of integrating cryptos into their operations.

After all, cryptos have already integrated into some sectors like travel and trading. So, businesses can use cryptos to improve their offers to customers. 

While regulators continue to tighten rules on crypto use, the younger generation is eager to profit from the technology. Increased smartphone penetration and internet access will also promote faster adoption.

These devices make it possible for companies to provide real-time access to financial transactions. Improved penetration has led to an upsurge in payment processing and mobile banking. 

Closing Remarks

To sum it up, the interaction between cryptos and fintech will be stronger going forward. What is even more promising is that most cryptos have recovered from the lows of the past. More people are renewing their confidence in these currencies.

So, as their adoption picks, the fintech sector will be more open to innovations. The good news is that stakeholders haven't stopped experimenting. As it looks, we might have a future financial sector driven by crypto-based systems. 

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