Back in 2018, 39% of executives were planning to invest about USD 5 million in blockchain technology. The same year, 94% of Fortune 500 companies already had ongoing blockchain-related projects. As you know, the numbers don’t lie. If the technology was such a hit two years ago among the top businesses of the world, then there is definitely something of great value in having it on your side. Blockchain has tremendous potential to change all the world’s operations as we know them. And if your business jumps into this fast-moving train today, then in a few years, the competition will not stand a chance of catching up.
What Is Blockchain?
Blockchain is a particular method of recording, storing, and structuring information in a database. Traditional database structure records information in tables while in the blockchain it is collected in blocks, and then chains. Every block is assigned a ‘place’ in the chain, and this ‘place’ cannot be changed. Moreover, once a record of the block is made, it cannot be retroactively corrected, interfered with, or altered in any other way. This irreversibility of the recorded data is one of the top reasons why financial services software companies opt to transfer their operations and technology into the blockchain.
Another particular aspect of blockchain is its decentralization. Every piece of information produced on the web requires a place of storage. Traditionally, databases have a particular set of points (servers), where the information is stored. Blockchain has no single point of storage. All information in the blockchain is scattered around multiple servers. In this way, should any server turn off or suffer an attack, the whole database remains untouched.
What are the building blocks of blockchain?
There are three elements to the blockchain backbone:
- Decentralization: Blockchain has no single body that can approve or disapprove of a transaction. There is no single authority in the system that approves or declines transactions; all members make all approvals of the system via consensus. That is why in banking software companies, this feature is predominant: every single member of blockchain has access and the right to verify/accept/reject every piece of data. As a result, the single point of failure ceases to exist in FinTech software development.
- Transparency: Blockchain gives every member of the system access to every transaction and process in it, hence guaranteeing maximum transparency to its users. At the same type, personal data and transaction details are encrypted within the chains so that only authorized members of the system (those with the encryption key) could verify the details.
- Security: The blockchain system has no take-backs. Once something happens within it and becomes recorded, there is no possibility to change or erase it. Furthermore, any change must be approved by the stakeholders’ consensus. It means that even if there is an attack on some data, then the consensus does not agree with this, and the attack fails. Such a system is essential for banking software development since it guarantees the highest level of data security to software users.
What are the benefits of blockchain?
The fundamental difference of blockchain from the architecture and working principles of a traditional database is what makes it so attractive for banking software development in particular. The transparency of all transactions, the possibility to track every action, and enhanced security are among the top reasons. However, some businesses opt for increased security, and the decentralized structure of blockchain becomes their top reason for system adoption. The truth is, each and every business can find its pros and cons in transferring their processes to the blockchain. Below is the list of the universal advantages one may consider; but remember that only a blockchain consultant or analyst can truly define personalized perks for your particular business.
- Greater security through decentralization – no single point which guarantees stronger balance and dependability, besides overall data security, of the service based on the blockchain technology.
- The lower long-term cost of operations (no additional fees required by third-party managers for transaction validations).
- Easy and fast verification of all data in the blockchain without the need to contact or get approval from a third-party authority (like transaction details in a traditional bank system).
- Simple traceability of every change in the blockchain and a possibility to reconstruct the whole chain for every system member.
- Well-organized data in the system with simple access to its every aspect with the cyber key.
- Faster and more straightforward operations within the system due to the open access to information for everyone on the blockchain (for example, the ability for faster loan approval with financial services software companies).
- Absence of data duplication and data tempering since all changes on a blockchain must be approved by consensus.
- Possibility to automate many processes with conditional statements and smart contracts.
How Can FinTech Software Development Help Business?
The benefits brought by blockchain can be implemented in any industry, not just the financial one, as many could think. Improved transparency and traceability are a perfect addition to the medical industry, for example, while better transaction security can benefit literally every company in every industry of any country. FinTech companies might not be the solution everyone is looking for, yet, they were the first ones to implement blockchain in FinTech software development so their experience with this technology is the greatest.
The potential of blockchain back in 2017 during the World Economic Forum was evaluated to reach 10% of the world’s GDP in the upcoming years. So instead of waiting for the technology to perfect, an industry can dive into to stay ahead of the competition with the multiple perks offered by blockchain. Below are several examples of new technology implementation in the major industries.
- Medical care: Blockchain guarantees security and accessibility of any block in the system with the safe access key. It means that medical facilities and departments of different countries can agree to join a single system where patients’ medical records could be accessed from any location in the world. Decentralized nature would guarantee almost 0% of system failure and ensure that in case of an emergency, a local hospital and doctor could find all the details on a patient’s health.
- Document-related businesses: All document-related processes, such as visa applications, loan applications, any kind of certificate approvals, require a person to wait for the documents to be verified by several governmental/company bodies before the application is approved. Blockchain and its smart contracts allow verifying any application and document within seconds significantly speeding up any document-related business.
- Identity-verification-based businesses: Personality verification can go fast and efficiently with blockchain as well. The system is similar to the documents described above but identity verification can be based on medical records like DNA, fingerprints, or retina. Since the blockchain system works on the acceptance of a change or request by anyone, the consensus verifies one’s identity based on several parameters hence granting this person access, or confirming their identity for further operations. The security benefit of blockchain also guarantees an extremely low possibility of identity theft which is common in other online-based systems.
- Logistics: Identity fraud causes 8 stolen trucks a day. Easy-to-implement schemes allow frauds to steal goods and remain unrevealed for a long time. Blockchain can easily minimize the number of such issues with its core characteristic – chain of blocks. Since every piece of information gets recorded and never altered within a blockchain system, it becomes very easy to track a person responsible for the theft of the goods.
- Real estate: Real estate deals require a lot of paperwork and verification. Since document verification can go faster, the need for all the massive filing and long contracts can be easily minimized to the blockchain if-else structure. Should the buyer meet all ‘if’ conditions, the deal can be proceeded and completed in a matter of seconds?
- Retail: Retail industry loses more than USD 25 billion a year on counterfeit production. Implementation of the blockchain system can help with tracking and reporting on the production steps of n item. In this way, it will be easy to identify a counterfeit company that will report on its factory, workers, and all production process.
In 2020, blockchain has already become a major part of many companies. Samsung is working with the South Korean government on making public safety and transport based on blockchain. A startup Bitgive provides clarity to charity transactions (gives as well as shares). Kodak has already used blockchain to control payments for photographs as well as intellectual property rights. The number of examples in all industries throughout the world is enormous, yet the technology is still in its primary stages of development. Blockchain and FinTech can help banking software companies as well as healthcare experts or manufacturing professionals to provide high-level safety and transparency to their businesses.
How FPT Uses This Technology for Its Clients?
The FPT Team has entered the blockchain industry rather recently, but over this time, we have already flashed in banking software development, healthcare records management, mortgage contracts confirmations, as well as a post-trading solution.
We helped a medical company conduct safer and faster payments for healthcare services and created software with instant medical history access to ensure that anyone in need of urgent care could receive the treatment at once.
Our document-management system for loan contracts provides reliable protection for all the involved parties (from lenders and insurers to borrowers). The blockchain-based solution guarantees that no participant can step away from the agreed terms. Upon request, the loan details can also be used for any secondary activities in the legal field.
While focusing on FinTech software development, we at FPT believe in challenges and achievements. Whether you have a complete concept of your next blockchain solution or you just know that the standard order of things must be changed, we are ready to come on board. Contact us to discuss a possible development, get a consultation, or simply request a demo. Be one step ahead of your competition with a new blockchain solution from FPT.