What Are the Benefits of Including Blockchain in Your Fintech Mobile App?
Tags: fintechappdevelopmentcompany, blockchain
Published: 2023-07-05 09:43:00


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Fintech is catching up quickly with the use of blockchain technology. Research shows the growing popularity of this phenomenal technology has been majorly seen between 2018-2022 in European and North American banks followed by Asia Pacific, which is currently the largest market to adopt Blockchain into the **[finance app development Services](https://www.whitelotuscorporation.com/fintech-app-development/)**
business. Looking ahead until 2028, a comprehensive analysis conducted by Mordor Intelligence reveals a substantial annual growth rate of 26.89% in the fintech blockchain market. 

In this blog, we explore some major use cases and fundamental factors that establish blockchain as the ultimate solution for fostering the growth and advancement of fintech startups and organizations. We delve deep into the extraordinary potential of this decentralized ledger technology, which plays a pivotal role in enhancing the capabilities of fintech applications.

## What is Blockchain? How Does it Work?

Blockchain technology is a powerful system for managing data that relies on advanced cryptography. It is the backbone of various cryptocurrencies and other decentralized applications. In simple terms, it is a decentralized digital ledger technology that helps keep records and information safe and trustworthy. It works by using a network of computers to create a list of records that are connected and locked using cryptography that is secret codes.

**Why do Fintech Apps Need Blockchain specifically?**

Besides considering security as one of the main reasons to adopt blockchain, there are many other reasons. Banks want their users to have secure and transparent transactions, with no alterations or manipulations. Especially, banking and financial contracts face several challenges due to the different methods followed by different countries. 

On a global front, the fintech industry needs to establish a deeper trust in its global customers. And hence they spend hefty amounts of money to build secured networks. When Blockchain comes in, there are no middlemen, no higher costs and the contracts go safe, clean, transparent, and highly secured. 

Blockchain technology offers high-security measures, especially for industries that heavily rely on secure contracts for financial operations. With blockchain implementation, insurance companies can effectively prevent fraudulent claims and ensure that only legitimate recipients receive benefits. Similarly, real estate mobile apps that involve financial services and contracts can greatly benefit from the transparency provided by blockchain technology.

More importantly, blockchain can eliminate the need for third-party intermediaries in financial transactions and contracts across various industries. This not only saves costs but also minimizes security concerns associated with involving multiple parties.

**Top Use Cases of Blockchain Technology in Enhancing Fintech Applications**

**- Lowering transaction expenses**

There are several things to consider before making an internet purchase. The firms or applications involved, the payment methods, and even intermediaries who might slow down the process and increase the cost are all factors. For transactions that take place internationally, this is much more challenging.

Blockchain technology eliminates the need for middlemen and their associated costs by enabling direct online transactions between individuals. Due to its decentralized nature, it also eliminates online payment delays. It guarantees seamless and error-free operations with real-time data changes, preventing additional fees or lost revenue.

**- Addressing identity theft problems**

Identity risks have occurred often over the previous ten years, and during the pandemic, they have gotten much worse due to a rise in digital fraud and identity theft problems.

Banks and fintech companies are now expected to adhere to stronger laws for customer identification and anti-money laundering to identify the best solutions to such problems. The usual procedures, however, require a lot of paperwork, which slows down transactions and causes delays. Verifying someone's identification and completing an Internet transaction might take weeks, and the absence of uniformity in these verification processes makes the issue worse.

Financial institutions are increasingly thinking about implementing a blockchain-based solution to address these problems. The system wants users to only need to verify their identification once. The system wants users to only need to verify their identification once. They get a verification document that works for international transactions. Additionally, they can log in without a password, manage and share personal data securely, and sign papers online thanks to this document.

**- Access to worldwide payment alternatives**

The blockchain network doesn't need any specific setup to function and runs entirely over the internet. The assets are digitally stored, and users may use their individual public and private keys to view data and conduct transactions from anywhere in the globe.

And as a result, doing international transactions is made simple. It was discovered that almost 60% of all blockchain-based transfers of digital assets involved transactions between various nations in a Statista study of the usage of blockchain in financial institutions.

**- Improved oversight and auditing processes**

The demand for regulatory services is increasing as financial connection becomes more advanced. To meet this demand, businesses require more sophisticated financial systems, which is where blockchain solutions come into play.

Blockchain use cases are more likely to entail the creation of new storage spaces for each new activity while maintaining the accuracy of earlier records in a decentralized system. Additionally, it keeps a permanent record of all transactions related to your blockchain. The technology also securely maintains the original trade papers, which users may view at any time.

A centralized source for all data and analytical reports is also provided by a blockchain, which is helpful for auditing. The time and money required for verification and accounting procedures are reduced by the intelligent read-only nodes. 

**- Credit assessments**

To assess their clients' monthly activities, **[traditional banks and financial organizations](https://www.whitelotuscorporation.com/fintech-app-development/)** frequently preserve the transactional information of their clients. They can construct credit reports and evaluate people's trustworthiness using the information they have collected. However, the fact that these organizations frequently rely on a single server or system creates serious security concerns. The personal information of any user can be accessed without restriction if someone can get into the system.

Systems built on the blockchain provide a more secure option. They spread the data out over many storage locations, lowering the possibility of illegal access. To further strengthen the privacy of data, they also use robust security algorithms and identity verification processes.

Even better, blockchain-based solutions can expedite the auditing of these credit reports.

**- Borrowing as a means of acquiring funds or making investments**

Even if some companies, like fintech startups, require money to develop or run effectively, it can be difficult for them to get traditional credit and loans. Similarly to this, tiny groups of investors look for chances to invest without putting in too much work or taking needless risks.

Using blockchain technology and, in particular, smart contracts, it is possible to match individual borrowers and investors. Asset transfers, clear agreements with fully understood conditions, and automated debt management and payback are all made possible by this technology. By utilizing blockchain, risks are decreased for both lenders and investors, giving individuals who are underserved by the current financial system opportunity.

**- Trading of financial instruments**

Blockchain networks, usually used by businesses, are disrupting the trading of financial assets. This process involves getting approvals, maintaining a record of actions, and providing access to verified roles like brokers and advisors.

Traditionally, these duties are carried out independently by each process participant. Blockchain, on the other hand, unites all of these firms in a single digital environment, guaranteeing accountability and transparency in their operations. Better solutions are obtained via financial clearing services, which reduce time and mistake rates.

**Final Thoughts**

Financial industry constraints including speed and cost of financial transfers are being eliminated through the usage of blockchain in fintech. Blockchain has several advantages because of its real-time database administration, financial monitoring, and resource management features.

However, it is crucial to find a trustworthy finance app development company to ensure the successful execution of your app. **[Whitelotus Corporation](https://www.whitelotuscorporation.com/)** provides fintech app development services for over a decade building successful apps. Armed with a team of enthusiastic developers, quality analysts, and designers, we offer you the best skills to make your project hit the charts of success and high profitability.