Top 10 Trends in Blockchain Financial Services

Global finance is now a trillion dollar industry that serves billions of people around the world. However, the system is full of problems that add cost through fees and delays. The redundant paperwork also creates friction throughout the process. 45 percent of financial services, such as stock exchanges, money transfer services, and payment networks suffer from economic crime every year, and 37 percent number for the entire economy. The stat shows how financial services are the top concern nowadays. 

The whole scenario might trigger a thought: why is our financial system so inefficient? First, paper-based and unorganized financial systems affect the experience. The financial system is centralized, which makes it resistant to modifications and vulnerable to system attacks and failures. Another reason behind the system’s inefficiency is the inaccessibility of basic financial tools. What’s the ideal solution to these problems? Blockchain is the answer. 

Blockchain technology is an emerging technology that is transforming the financial services industry and making it more effective with its capabilities. Working with Blockchain financial services is not the only step required for better finance activities functioning. It is also imperative to walk with the ongoing trends. Therefore, we have listed down the top ten trends in blockchain financial services. 

• Decentralized Finance (DeFi) 

DeFi (Decentralized Finance) is one of the fastest-growing trends in Blockchain finance that offers decentralized applications and services. Individuals having access to a stable internet connection can access the services. These applications are built on Blockchain networks and use smart contracts in order to automate the transactions that make peer-to-peer lending, trending, and borrowing convenient and hassle-free without any need for intermediaries. 

• Central Bank Digital Currencies (CBDCs)

CBDCs are government-backed digital currencies issued by central banks. In today’s Blockchain world, CBDCs are gaining extensive popularity as it plays a crucial role in modernizing and improving traditional financial systems. Generally, the thought hits an individual’s mind – Is CBCD cryptocurrency? CBDCs aren’t cryptocurrencies as they are controlled by a central bank, whereas cryptocurrencies are decentralized as they can’t be regulated by any authority. CBDCs can enable faster and cheaper transactions while providing greater security and reducing the risk of fraud.

• Non-Fungible Tokens (NFTs)

NFT is a digital asset that can be any art, music, game, virtual real estate, videos, or more that can be bought and sold only with cryptocurrency. Such assets are encoded with the same software used as many cryptos. NFTs have been in the Blockchain market since 2014. However, it is being noticed in recent years because of several reasons. NFT sales volumes roughly were estimated to be $24.9 billion in 2021 that was $94.9 million in 2020. The introduction of NFT in finance offers a new way to invest and store value. 

• Smart Contracts

Smart contracts are self-executing agreements or contracts between buyer and seller. Such contracts are simply computer programs stored on Blockchain that execute the agreement or trigger the next action when predetermined conditions are met. Smart contracts help automate various financial services such as loans, insurance, and derivatives, eliminating the need for intermediaries and improving efficiency.

• Asset Tokenization

The term ‘Asset tokenization’ is gaining huge popularity these days. It refers to the process of creating digital tokens, representing the ownership of previously illiquid assets, such as art, real estate, or private equity. Asset tokenization enables fractional ownership and trading that provides new opportunities for investors and increases liquidity in previously illiquid markets. Leveraging this Blockchain financial services trend can benefit investors and businesses to a good extent. 

• Stablecoins

Stablecoins are cryptocurrencies that are considered a stable asset, such as a fiat currency or commodity that offers a reliable store of value and, at the same time, reduces volatility. Stablecoins are highly used for transactions and investments, and now their use has been increasingly noticed as DeFi applications.

• Cross-chain Interoperability

As more and more Blockchain networks are being introduced, interoperability is now becoming increasingly important to ensure seamless communication and collaboration between different blockchain platforms. Today, cross-chain interoperability solutions are being developed for increased interoperability between different blockchain networks, allowing for greater efficiency and scalability.

• Digital Identity Management

Today, Blockchain-based digital identity solutions are developed to offer maximum control to users on their personal information. Digital identity management primarily is a unique way to collect, store and access customer’s personal information safely. Such solutions add to security while also improving access to financial services. When a user will have control over their information, the chances for fraud and scams will be low.

• Green Finance

The Blockchain finance world is also flooded with Blockchain-based green finance solutions that are being developed to promote sustainable investments and reduce the carbon footprint of financial activities. Blockchain can offer maximum transparency and traceability in supply chains, adding more to sustainability.

• Regulatory Compliance

Blockchain-based solutions are being developed to help financial institutions comply with regulatory requirements, such as KYC/AML (Know Your Customer/Anti-Money Laundering), improving transparency and reducing the risk of fraud. Blockchain can provide a tamper-proof record of transactions that is easier to track and monitor financial activities.

Conclusion

In conclusion, blockchain is a foundation technology that has the potential to transform the finance sector with new innovations. However, it is imperative to walk with the ongoing Blockchain financial services trends listed above so that you won’t miss a single opportunity to grow. As blockchain technology continues to evolve, we would see more related trends in the financial services industry. 

Antier believes in making a move at the right time as it leaves a strong impact and helps achieve goals faster. We are a leading expert in Blockchain development for finance that has helped several businesses to streamline their financial operations and forge the path for better efficiency and reduced errors. Our expertise in technology helps us deliver robust Blockchain applications in finance, matching the client’s requirements and expectations.