Blockchain and Fintech Development

3년 전

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Technology has played an integral role in the advancement of financial service products for years. Whether it’s the online brokerage revolution of the 1990s, the rise of digital payment services, the mobile wallets, or the recent surge of “fintech” revolution, aka the blockchain technology; they collectively led to a sizable shift in how people manage, save and spend their money. These blockchain technologies started delivering a combination of accessibility, convenience, innovation and price that wasn’t possible as recent as 20 years ago. This remarkable process is achieved through the developments in the fintech environment and now more is expected with the recent developments of the blockchain technology. In order to have more comprehensive understanding of how blockchain technology emerged in this scene, it is necessary to glance over main two stages in “fintech” development.

Back in 2016, to overcome the cybersecurity and regulatory requirements, there was an attempt to enhance customer digital experience thanks to an omnichannel approach. This approach made it possible for the customers to choose the interaction method with their banks. The preferred method for the majority of these customers was online banking, dominating the other methods such as visiting the branch or using an ATM.

The second significant advancement demonstrating the collaboration between software and finance sector was the numerous applications and software programs enabling customers to have personalized access to their financial information from their financial institutions. Primarily, these financial institutions increase their trustworthiness thanks to the digital disruptors that are built with the help of the advances in other industries including data analytics, machine learning, and smart devices. This collaboration between the finance and information technology sectors is conceptualized as “fintech”, that is the “new marriage of financial services and information technology.” It is not to say that the interlinkage of these sectors is a new notion but to say that its newness has resulted from the evolution of fintech into the new paradigm in the aftermath of the global financial crisis in 2008. After this economic collapse, there were further attempts to eliminate the problems originating from the inability of both regulators and market participants to balance potential benefits of innovations and potential risks.

It can be stated that this crisis is a breaking point in many aspects. Before 2008, especially in the developing nations, there was a hegemony of financial markets supported by formal economic sector with the leadership of private and public banks. The economic crisis environment enforced a global transformation into pushing the state authorities to establish effective governance especially economy within the national boundaries. This situation can also be referred to as “the end of the geography.” However, the 2008 economic crisis raised eyebrows regarding the current processes of the states and surfaced the need to create a new “thing.” This was not just related to separating money production process controlled by the state but about the concept to produce money not aiming the welfare of the banks but to establishing the sovereignty of individuals, the control of “us” over the money creation process.

The latest tendency towards the new cycle of disruptive innovations is the blockchain technology. While its transformative effects have been already seeing across financial, legal, commercial, art and technological sectors and industries, some of them being potentially the most important breakthrough advancements of our time, its disruptive side is worth to talk about when it could have an impact are ranging from social matters to current market relations and even family relations shaped by traditional gender roles.

Especially, for the unbanked population, a group of more than 2.5 billion people worldwide according to the World Bank, Blockchain technology’s benefits cannot be ignored. For many – and particularly for those in developing countries – cash is the only way to participate in their economy. That means that they can’t access any credit line to purchase anything, ranging from the most routine (e.g., groceries) to the expensive (e.g., a house) let alone a capital to start a business. The collective impact of limiting credit to these audiences is apparent, even only from a number’s standpoint. While this shouldn’t come as much of a surprise that people are inclined to participate in the economy with more confidence than they do with cash, an MIT study revealed quantitively that people are willing to spend up to 100 percent more when using a card than they do with cash. The collective impact of that, when extended to a scale of 2+ billion people, is far more obvious.

Blockchain technology’s impact which contributes to women’s economic empowerment is another aspect we have to take into account, making the technology evermore reliable and scalable. As one of the most disturbing and continuous problems, gender inequality is very closely linked to financial independence. While rural women in developing countries are not able to access any traditional banking solutions unlike the women in the developed world; women in humanitarian crisis regions cannot afford sufficient opportunities, in some cases being deprived of having even a simple financial account. This situation basically leads to them being financially dependent on their husbands or other men of their kin. With blockchain, however, women can disintermediate their husbands and use blockchain to possess a secure ID, access to legal contracts, and make secure transactions. Hence, it can be seen that the disruptive power of blockchain on what was known as a conventional method, enables women to be economically empowered and to make their credit and economic futures “emancipated.”

As blockchain technology puts more importance on the finance sector and offers simplified ways to send and receive payments, we can expect to see a gradual shift in control of user information and credit scores from large, centralized institutions to the users themselves. Everyone deserves a fair and secure banking system; blockchain technology stands to disrupt the financial services industry by offering honest, convenient, accessible transactions and credit assessments. As we gradually adopt and start leveraging these new technologies, more people can gain access to a safe and reliable banking system globally.


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