When Bitcoin introduced the concept of blockchain technology more than a decade ago, the idea seemed like a straightforward concept. We could create a global, borderless economy that eliminated the middleman, letting our money have more value because fewer hands were handling each transaction.
Why Does Fintech Focus on Blockchain?
Tokenization is the future of the finance industry for one reason alone: convenience. Fintech can take blockchainization concepts to any business without much difficulty because it is the most convenient environment for AML regulation applications.
According to Deltec Bank, Bahamas – “Every transaction on the blockchain comes with a trusted track record. As more institutions embrace the concepts offered with this technological approach, then the financial industry can self-regulate itself better.”
When fewer regulations govern each action taken by banks, credit unions, and digital institutions, then there is more room for development and innovation.
That is why the emphasis of the fintech industry is to create more legitimacy for blockchain technology by encouraging a healthy balance of regulation and freedom to protect everyone’s best interests.
How Powerful Is Blockchain Technology?
Anne Boden shares her experiences in the banking industry in her book called The Money Revolution. She also says that blockchain is the most revolutionary change in our approach to money that is on the horizon.
Boden spent over three decades working in the traditional banking model. She went to AIG after the financial crisis in 2009 to help turn things around. That’s when she concluded that fintech and blockchain made it easier to start a new bank instead of trying to fix an older one.
Blockchain technology gives customers a fresh start with a new system that does not suck value out of each transaction. Consumer habits are changing. Boden likens what fintech is doing to how people shop through iTunes or Amazon for music instead of buying a record at a local store.
Technology even causes regulations to change. Blockchain gives consumers more everyday usability on their own devices to manage their funds in personalized ways.
The only problem in this area at the moment is that fintech offerings are still significantly based on the conventional payment infrastructure. It might be easier to manage your money once you get it into a digital bank or an app-based solution, but the funds must also go through the cross-border payment process that can take up to two to three days to settle.
A decentralized digital currency powered by blockchain could revolutionize the payments and banking industry. It creates faster transactions, requires minimal fees, and secure transparency. As fintech continues to develop tokenization and blockchainization opportunities, a new era of banking may begin to appear.
Disclaimer: The author of this text, Robin Trehan, has an undergraduate degree in Economics, Masters in international business and finance and an MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.