How crypto is shaping the fintech and banking landscape

Cryptocurrency may once have been just a fringe interest, but not anymore, as it has successfully embedded itself into mainstream finance, reshaping people’s views about money and transactions. When Bitcoin was first born in 2009, it was nothing but a niche digital currency that sparked some curiosity. Since that time, however, many other assets emerged, known as altcoins – for instance, Ethereum has become an appealing alternative to Bitcoin due to its features ( such as smart contracts), and it has established a community of enthusiasts eager to find out about the ETH prediction for the future.

How crypto is shaping the fintech and banking landscape

Furthermore, crypto is disrupting entire sectors today, particularly fintech. For big players in the tech landscape, the question isn’t whether cryptocurrencies will transform banking but rather how quickly it will happen and how it will change the game. This blog explores the impact of crypto on fintech and banking, so read on if you want to learn more about this topic!

The role of digital assets in reshaping financial services

Notably, banks weren’t always open to cryptocurrencies, but many of them are currently taking steps to make cryptocurrencies a part of their offerings. Many global powerhouses have launched their own crypto services, which indicates that they are finally realizing the untapped potential of crypto. Essentially, cryptocurrencies are challenging the way traditional banks operate. If you’ve tried making international transactions before, you are probably familiar with how the entire process goes- there are long waiting times and high fees, which only makes you feel frustrated in the end. 

Digital assets, like fractional real estate ownership, tokenized stocks, and cryptocurrencies, are reshaping financial services by offering increased accessibility to investment opportunities. Tokenization enables fractional ownership, enabling large investments to be broken down into smaller, more manageable portions, thus opening the markets to a larger audience. The assets are also driving the transformation towards faster transactions and greater liquidity. Digital assets offer investors more control and flexibility, ensuring that processes can happen in real-time rather than taking many days. Furthermore, DeFi platforms are eliminating traditional barriers, enabling users to trade, lend, and borrow without banks getting involved in the process.

Understanding the main use cases for digital currencies in the Fintech space

We’ve previously discussed how digital currencies can streamline different financial processes, and fintech software development is in a position to make the most out of these advantages. Remittances are a good example to this end – based on trends, the global remittance will likely keep increasing, and cryptocurrencies are lowering fees and speeding up transfer times for those who send money home. Notably, remittances are an essential income source for those living in developing countries, and because they are international transfers, processing them can take longer, simultaneously requiring high transaction fees for their issuance. In order to stimulate international economies, financial enterprises can implement cryptocurrencies to make remittances more efficient, which is precisely what El Salvador has been doing with its Chivo Wallet. 

Other important use cases are smart contracts, which represent trustless agreements built on the blockchain, automated, and used in insurance, lending, and real estate. A financial company can provide crypto lending services to customers, safeguarded by a private blockchain. By leveraging smart contracts, companies enable customers to execute lending contracts immediately, ultimately saving them money and time. 

Crypto: a powerful tool for financial inclusion 

There are millions of unbanked individuals worldwide, and crypto provides an alternative to traditional banking for these people, offering access to services via a smartphone only. By eliminating the need for a bank account, crypto assets empower individuals to send, receive, and store cash, regardless of location. Furthermore, cryptocurrencies enable users to buy goods and services without requiring traditional payment systems, which further improves financial inclusion. However, to fully harness the advantages of crypto for financial inclusion, it’s worth noting that companies must put in the required efforts to enhance digital literacy and educate users about both the opportunities and risks involved when getting started with digital assets. By offering accessible training programs and educational resources, individuals can master the necessary knowledge and skills to navigate the crypto landscape safely and effectively. 

Assessing both rewards and risks when investing in cryptocurrencies

Investing in crypto isn’t for the faint-hearted, as besides offering gains, it also comes with tremendous risks. For those new to the crypto space, the volatile nature of the assets can be daunting. For instance, it’s no secret that Bitcoin has seen many price fluctuations during its lifetime – although it has created Bitcoin millionaires, it has also bankrupted other individuals who invested in it. Hence, education is imperative when getting started with crypto, and this involves knowing how to secure digital wallets, select the right coins, and gain an understanding of market trends. 

Crypto assets such as Bitcoin are increasingly seen as a store of value(like gold), offering a hedge against inflation, so their benefits are indeed notable. But to outweigh the risks, it’s important to first understand the ins and outs of these digital assets. If you’re a fintech company aiming to incorporate crypto within its operations, remember to focus on user education and security, as this will make an entire difference on their investing journey, protecting them from market volatility, regulatory uncertainty, and hacking. 

The bottom line

Many innovations are reshaping banking, ranging from blockchain and DeFi to artificial intelligence and machine learning. Recently, the impact of AI and MI has been clearly seen when it comes to providing predictive analytics, enhancing customer experiences, and automating customer service, as well as the role of big data in enabling financial institutions to make more informed decisions. These innovations, alongside blockchain and digital currencies, can revolutionize banking as is known. Undoubtedly, the crypto market is poised for continuous innovation, growth, and wider market adoption. This growth will be fueled by greater blockchain integration into different industries, such as healthcare, finance, and supply chain management. 

Fintech enterprises investing in crypto solutions will be well-positioned in the future, helping them stay at the forefront of the latest innovations in an increasingly digital world.