Looking to the Future of Blockchain Technology in Fintech – What You Need to Know

It’s true that technology changes every day; from reading entire newspapers online to advances made in healthcare, technological innovations are being made at a record pace across every industry. It’s also true that technology waits for no one – which is why consumers should welcome any and all opportunities to learn what’s on the horizon.

To understand the revolutionary way this type of technology will change the financial industry, it’s important to first understand each part of the equation. Financial technology – often referred to as “fintech” – are businesses that use new technology to create cutting edge (and better) services for businesses and consumers. Fintech companies are often start-up companies that are competing directly with traditional banks but bringing specialized products to areas such as consumer banking, personal finance and retail investments.

Blockchain technology is a little more complicated to explain, but necessary in order to fully grasp the effect it will have on the future of financial institutions. Originally devised for Bitcoin, blockchain is a record of transactions, not just for financial items, but for practically everything that has a value. Information on a blockchain is shared – without a centralized version – making the information public and easily accessible. The data is accessible to anyone on the internet, making it difficult for hackers to corrupt.

Financial databases today prevent two users to be “in” the same document at once. Banks must temporarily lock access during a transfer and then re-open once the other side has been updated. By sharing one version – like Google Docs, for example – both sides stay up to date and information has less of a chance of getting lost or corrupted.

TEDx speaker Ian Khan believes this technology will help financial institutions maintain the integrity of the transaction that so many consumers seek. “Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”

Toronto investment executives Mark Attanasio and Donato Sferra have watched the industry evolve. As Managing Partners of Hillcrest Merchant Partners, Mark Attanasio and Donato Sferra invest in companies that specialize in cannabis, electric metals, mining, and gaming. They focus part of their efforts on tech companies like fintech, wireless and communications infrastructure, and stress the importance of staying competitive in these industries.

“In terms of application, blockchain can be very easily applied to areas such as banking – storing digital assets and transacting around the world in terms of wire transfers which can be done very quickly, arguably more secure using distributed ledger, and much more cost effectively than traditional methods,” Sferra said. “In the legal world, executing contracts on a blockchain is much more secure than traditional routes and removes any risk of tampering or manipulation. Those are the two most obvious applications that I see.”

“We see that regulations in crypto and in blockchain are needed and we welcome it,” Attanasio said. “We think that the regulation will basically be governments around the world recognizing the value of blockchain and crypto.”

The internet brings with it a slew of security issues that have affected everyone, however, blockchain eliminates the risk of centrally stored data by storing data across its network, which is precisely why this method is gaining momentum across so many different sectors.