This website uses cookies to better the user experience of its visitors. Where applicable, this website uses a cookie control system, allowing users to allow or disallow the use of cookies on their computer/device on their first visit to the website. This complies with recent legislative requirements for websites to obtain explicit consent from users before leaving behind or reading files such as cookies on a user’s computer/device. To learn more click Cookie Policy.

Privacy preference center

Cookies are small files saved to a user’s computer/device hard drive that track, save, and store information about the user’s interactions and website use. They allow a website, through its server, to provide users with a tailored experience within the site. Users are advised to take necessary steps within their web browser security settings to block all cookies from this website and its external serving vendors if they wish to deny the use and saving of cookies from this website to their computer’s/device’s hard drive. To learn more click Cookie Policy.

Manage consent preferences

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.
Cookies list
Name _rg_session
Provider rubygarage.org
Retention period 2 days
Type First party
Category Necessary
Description The website session cookie is set by the server to maintain the user's session state across different pages of the website. This cookie is essential for functionalities such as login persistence, ensuring a seamless and consistent user experience. The session cookie does not store personal data and is typically deleted when the browser is closed, enhancing privacy and security.
Name m
Provider m.stripe.com
Retention period 1 year 1 month
Type Third party
Category Necessary
Description The m cookie is set by Stripe and is used to help assess the risk associated with attempted transactions on the website. This cookie plays a critical role in fraud detection by identifying and analyzing patterns of behavior to distinguish between legitimate users and potentially fraudulent activity. It enhances the security of online transactions, ensuring that only authorized payments are processed while minimizing the risk of fraud.
Name __cf_bm
Provider .pipedrive.com
Retention period 1 hour
Type Third party
Category Necessary
Description The __cf_bm cookie is set by Cloudflare to support Cloudflare Bot Management. This cookie helps to identify and filter requests from bots, enhancing the security and performance of the website. By distinguishing between legitimate users and automated traffic, it ensures that the site remains protected from malicious bots and potential attacks. This functionality is crucial for maintaining the integrity and reliability of the site's operations.
Name _GRECAPTCHA
Provider .recaptcha.net
Retention period 6 months
Type Third party
Category Necessary
Description The _GRECAPTCHA cookie is set by Google reCAPTCHA to ensure that interactions with the website are from legitimate human users and not automated bots. This cookie helps protect forms, login pages, and other interactive elements from spam and abuse by analyzing user behavior. It is essential for the proper functioning of reCAPTCHA, providing a critical layer of security to maintain the integrity and reliability of the site's interactive features.
Name __cf_bm
Provider .calendly.com
Retention period 30 minutes
Type Third party
Category Necessary
Description The __cf_bm cookie is set by Cloudflare to distinguish between humans and bots. This cookie is beneficial for the website as it helps in making valid reports on the use of the website. By identifying and managing automated traffic, it ensures that analytics and performance metrics accurately reflect human user interactions, thereby enhancing site security and performance.
Name __cfruid
Provider .calendly.com
Retention period During session
Type Third party
Category Necessary
Description The __cfruid cookie is associated with websites using Cloudflare services. This cookie is used to identify trusted web traffic and enhance security. It helps Cloudflare manage and filter legitimate traffic from potentially harmful requests, thereby protecting the website from malicious activities such as DDoS attacks and ensuring reliable performance for genuine users.
Name OptanonConsent
Provider .calendly.com
Retention period 1 year
Type Third party
Category Necessary
Description The OptanonConsent cookie determines whether the visitor has accepted the cookie consent box, ensuring that the consent box will not be presented again upon re-entry to the site. This cookie helps maintain the user's consent preferences and compliance with privacy regulations by storing information about the categories of cookies the user has consented to and preventing unnecessary repetition of consent requests.
Name OptanonAlertBoxClosed
Provider .calendly.com
Retention period 1 year
Type Third party
Category Necessary
Description The OptanonAlertBoxClosed cookie is set after visitors have seen a cookie information notice and, in some cases, only when they actively close the notice. It ensures that the cookie consent message is not shown again to the user, enhancing the user experience by preventing repetitive notifications. This cookie helps manage user preferences and ensures compliance with privacy regulations by recording when the notice has been acknowledged.
Name referrer_user_id
Provider .calendly.com
Retention period 14 days
Type Third party
Category Necessary
Description The referrer_user_id cookie is set by Calendly to support the booking functionality on the website. This cookie helps track the source of referrals to the booking page, enabling Calendly to attribute bookings accurately and enhance the user experience by streamlining the scheduling process. It assists in managing user sessions and preferences during the booking workflow, ensuring efficient and reliable operation.
Name _calendly_session
Provider .calendly.com
Retention period 21 days
Type Third party
Category Necessary
Description The _calendly_session cookie is set by Calendly, a meeting scheduling tool, to enable the meeting scheduler to function within the website. This cookie facilitates the scheduling process by maintaining session information, allowing visitors to book meetings and add events to their calendars seamlessly. It ensures that the scheduling workflow operates smoothly, providing a consistent and reliable user experience.
Name _gat_UA-*
Provider rubygarage.org
Retention period 1 minute
Type First party
Category Analytics
Description The _gat_UA-* cookie is a pattern type cookie set by Google Analytics, where the pattern element in the name contains the unique identity number of the Google Analytics account or website it relates to. This cookie is a variation of the _gat cookie and is used to throttle the request rate, limiting the amount of data collected by Google Analytics on high traffic websites. It helps manage the volume of data recorded, ensuring efficient performance and accurate analytics reporting.
Name _ga
Provider rubygarage.org
Retention period 1 year 1 month 4 days
Type First party
Category Analytics
Description The _ga cookie is set by Google Analytics to calculate visitor, session, and campaign data for the site's analytics reports. It helps track how users interact with the website, providing insights into site usage and performance.
Name _ga_*
Provider rubygarage.org
Retention period 1 year 1 month 4 days
Type First party
Category Analytics
Description The _ga_* cookie is set by Google Analytics to store and count page views on the website. This cookie helps track the number of visits and interactions with the website, providing valuable data for performance and user behavior analysis. It belongs to the analytics category and plays a crucial role in generating detailed usage reports for site optimization.
Name _gid
Provider rubygarage.org
Retention period 1 day
Type First party
Category Analytics
Description The _gid cookie is set by Google Analytics to store information about how visitors use a website and to create an analytics report on the website's performance. This cookie collects data on visitor behavior, including pages visited, duration of the visit, and interactions with the website, helping site owners understand and improve user experience. It is part of the analytics category and typically expires after 24 hours.
Name _dc_gtm_UA-*
Provider rubygarage.org
Retention period 1 minute
Type First party
Category Analytics
Description The _dc_gtm_UA-* cookie is set by Google Analytics to help load the Google Analytics script tag via Google Tag Manager. This cookie facilitates the efficient loading of analytics tools, ensuring that data on user behavior and website performance is accurately collected and reported. It is categorized under analytics and assists in the seamless integration and functioning of Google Analytics on the website.

6 Promising Use Cases of Blockchain in FinTech

  • 22038 views
  • 9 min
  • Aug 30, 2018
Daryna P.

Daryna P.

Copywriter

Vlad V.

Vlad V.

Chief Executive Officer

Share

The blockchain gained international prominence via cryptocurrencies. Yet the blockchain has more to offer than mere virtual currencies. This technology covers the essential needs of the FinTech industry, helping companies to

  • track the complete lifecycle of a financial transaction;
  • create secure financial products at minimal cost;
  • make financial services both functional and technologically sophisticated.
How the Blockhain Benefits Fintech

Let’s consider the most promising use cases of the blockchain in the financial sector.

1. Global payments

We’ve all heard that blockchain-powered payments are hyper-secure and private. The principle is that each user has personal cryptocurrency keys that they can use to conduct transactions safely. The blockchain ensures that only participants involved in a particular transaction know the details of this transaction. Any changes to the transaction are possible only with the consent of all participants. The blockchain spreads such changes across the entire network in real time so that participants stay informed constantly. You can find out more information about this technology in our article on how the blockchain works.

A blockchain records and validates each and every transaction and administers transactions in a way that no one can tamper with or delete them post-execution. FinTech companies such as æternity leverage this advantage of the blockchain to protect payments. Æternity uses a blockchain to create scalable smart contracts that secure automated payments.

Another benefit of the blockchain is that it eliminates the need for an intermediary to handle financial services like money transfers. This is a huge relief for businesses that provide peer-to-peer (P2P) transactions as well as for individual payers.

P2P payments

Sending money abroad involves high transaction fees from both individual consumers and small and medium-sized businesses. Based on transaction volumes, fees range from 1.7 to 16.18 percent of the total transaction amount, bringing the remittance industry $40 billion in fees each year.

Global Cost of Remitting Across Deifferent Conutries
Based on the World Bank’s 2018 report

In addition, cross-border transactions are often delayed. The blockchain can efficiently resolve this problem, streamline remittances, and save costs during cross-border transactions.

To make the costs more evident, we’ve created a chart that shows average transaction fees using traditional methods versus digital currency. The figures are from the World Bank and BitInfoCharts.

Type of transfer Average transaction fee as of August 2018 Cost of sending $50
Bank transfer 10.41% $5.20
Post office 6.81% $3.405
Western Union 6.15% $3.075
Mobile operator (M-Pesa) 3.20% $1.60
Ethereum $1.667 per transaction $1.667
Bitcoin $0.598 per transaction $0.598
Litecoin $0.27 per transaction $0.27

There are many blockchain FinTech startups offering crypto-based money transfers, including Ripple, OkCoin, BitPesa, Sentbe, and Abra. These services take rather small cuts. Sentbe, for instance, promises its clients fees 95 percent lower than what banks can offer.

The blockchain can revolutionize the charity sector as well. Alice is a donation platform that uses Ethereum to serve as a transparent donation system and return trust to charity activities. The company shows each donor the impact their money makes.

2. Trading and trade finance

The trade financing sphere involves lots of tedious paperwork and bureaucracy. Stock and share purchases have to pass through brokers, exchanges, clearing, and settlement. Each transaction is typically settled within three days. Yet transactions can be delayed when trading occurs over the weekends.

You need to make sure that all counterparty balances are matched and resolved across global trading systems involving thousands of participants. Each trader must maintain their own database for all transaction-related documents and constantly check this database against others for accuracy, as a single error in one document can propagate across all copies of this document.

The blockchain can exempt traders from burdensome checks of counterparties and optimize the whole lifecycle of a trade. Using a blockchain, companies can enhance trade accuracy, speed up the settlement process, and reduce risks.

Blockchains help to exclude gray tactics such as naked short selling, which is when a person sells stock they’ve borrowed from an owner and don’t own themselves.

Ornua and Barclays completed the world’s first blockchain trade transactions in 2016, spending four hours instead of a week on a letter of credit — a document guaranteeing the export of $100,000 worth of agricultural products.

Among popular blockchain-powered trading platforms are Overstock.com, Nasdaq, Bitfinex, BitShares, and Kraken.

3. Regulatory compliance and audits

As global demand for regulatory services is expected to be worth $118.7 billion by 2020, FinTech companies are advancing regulatory compliance via modern technologies such as the blockchain. A blockchain, with its immutable nature, can remove risks, uncertainty, and complexity associated with regulation. Once data is saved into the chain, no one can modify or delete it. This is the reason companies use blockchains as irrefutable proof of the transfer of any digital asset.

A blockchain tracks each and every verified transaction and records all actions taken by participants of the transaction so that regulators don’t need to confirm the authenticity of records. On top of that, a blockchain allows regulators to review the original document of the actual transaction rather than manifold copies.

Some regulatory companies are already experimenting with blockchains. Elliptic provides regulatory services for the financial sector to detect and prevent malicious activities in cryptocurrencies.

Coinfirm, a blockchain-based compliance platform, serves in-depth reports on financial risk and verifies the authenticity and ownership of any type of document.

Blockchain immutability also diminishes the possibility of errors and guarantees integrity of records for financial reporting and audits. Since all data is stored in one location, a blockchain can standardize reporting and accounting and revamp the way auditors extract and analyze information. Auditors can access all data in real time with read-only nodes on chains. In this way, the blockchain decreases the time and costs needed for auditing and accounting.

Many accounting firms have given blockchain technology a try. EY has launched its EY Blockchain Analyzer. This product encompasses a set of blockchain audit technologies to bring review of cryptocurrency transactions to a new level. PwC, one of the Big Four accounting companies, has announced a blockchain validation solution to control risks in the blockchain space.

4. Digital identity

The number of fraudulent accounts has increased by 50 percent since the end of 2017, resulting in 900 million malicious transactions in the first quarter of 2018. Banks have to run rigorous KYC (Know Your Client) and AML (Anti-Money Laundering) checks on their new clients. These checks take 30 to 50 days to be completed, and thus can greatly delay a transaction.

Another issue is that financial institutions don’t have a standardized set of documents that clients must submit to prove their identities. Different institutions can duplicate lengthy verification processes, which require considerable spending from both banks and clients.

The blockchain offers a digital identity system. Using this system, clients need to go through validation just once and can then use this verified identity document to conduct transactions all over the world. A blockchain allows clients to

  • manage their personal identity data and reputation;
  • share their data with others without safety concerns;
  • log in to digital services without passwords;
  • digitally sign any type of document, such as claims and transactions.

Many companies offer universal digital identity solutions, including American ShoCard and HYPR, the English anti-counterfeit solution BlockVerify, the Finland-based service Identifi, and the South African startup Civic.

With blockchain, firms can also establish corporate identities while easily onboarding new employees. uPort has already created a digital identity management product addressing the needs not only of individual clients but also of enterprises.

5. Credit scoring

The conventional banking system ignores a large potential audience of 1.7 billion adults and 160 million small businesses worldwide. These neglected customers include

  • people living in rural areas;
  • people with no checking or savings account (the unbanked);
  • people with an account at an insured institution but who also use alternative financial providers (the underbanked).

Millennials form another group of unbanked who sometimes see no point in having a checking or savings account in a traditional bank. By disregarding these groups of consumers, banks lose around $380 billion annually in potential revenue.

Apart from the unbanked and underbanked, two more groups of consumers — credit invisible and unscorable — lack banking services. The Consumer Financial Protection Bureau (CFPB) points out that one in ten adults in the USA doesn’t have any credit history, and 19 million Americans have unscored credit records.

By unscorable consumers, we mean people who have credit records at least in one credit reference agency but the data is either too little or too out-of-date to generate a reliable score. Thus, millions of people are deprived of loans, mortgages, the ability to rent apartments, and more.

The blockchain can tackle this problem and provide a new way of credit scoring. The Royal Bank of Canada has already released a blockchain-powered credit scoring platform. This platform analyses more data sources than existing systems and estimates credit scores based on identification data, historical data, and predictions about borrowers.

Colendi, Bloom, and Enigma are services offering decentralized credit scoring for FinTech companies and allowing consumers to leverage global credibility identity.

Unbancked and Underbancked Consumers

6. Smart loyalty programs

Beyond securing and streamlining financial processes, the blockchain can reform customer rewards systems. With blockchains, companies have access to a wide range of low-cost loyalty programs they can customize to meet the needs of distinct customer groups.

Blockchain-based loyalty programs are fully trackable, so firms can analyze at any time how much money was spent, which programs work, and which don’t work.

The blockchain also reduces unnecessary frictions related to loyalty programs, making them more convenient for consumers. Since an inconvenient and time-sapping registration process stops 70 percent of consumers from signing up for a loyalty program, a blockchain can drive higher levels of customer involvement and satisfaction.

Benefits of Smart Loyalty Programs
Based on data provided by the Waves open-source blockchain platform

There are many blockchain ecosystems, including Waves, Loyyal, and Qiibee, that provide advanced rewards solutions. Qiibee, for example, creates a unique coin for each new partner. For instance, the company created the Sausalitos Coin for Sausalitos, Germany’s leading cocktail bar and restaurant chain.

Blockchain-powered vs traditional FinTech

Even though there are certain risks associated with the blockchain, this technology can reshape the whole way that FinTech companies function in the global economy. Once you can understand the potential of the blockchain and when and how to apply it, you can push your business way beyond your competitors.

If you want more posts related to the blockchain and other innovative technologies, subscribe to our blog.

CONTENTS

Authors:

Daryna P.

Daryna P.

Copywriter

Vlad V.

Vlad V.

Chief Executive Officer

Rate this article!

Nay
So-so
Not bad
Good
Wow
3 rating, average 4.33 out of 5

Share article with

Comments (2)
Konstantin Santur
Konstantin Santur almost 6 years ago
Good article, Darina, thank you very much. Here p2p lending have been mentioned, I deal with that topic. For those ones who want to make a deep research of blockchain in p2p and, probably, invest money, I would recommend this review - https://softmedialab.com/blog/blockchain-for-p2p-lending/ The blockchain is worth studying, let's join forces :)
Reply
Maryna Z.
Maryna Z. almost 6 years ago Konstantin Santur
Hi Konstantin! High five!
Reply

Subscribe via email and know it all first!