How does blockchain relate to fintech?
First of all, what even is blockchain?
Simply put, it’s a virtual chain that links every transaction in the crypto space. The blockchain network is like a digital notebook as it automatically records and verifies each crypto transfer. Everyone can see the transaction history, but no one can alter it, making blockchain transparent and secure.
In the late 2010s, blockchain began to take over the fintech industry. A whole new niche appeared called decentralized finance or DeFi for short. These platforms focused on crypto and allowed users to trade digital currencies quickly. The fintech market was bursting with DeFI products, from exchange platforms to microfinancing apps. Around that time, stablecoins also became popular — these are crypto assets tied to real currencies.
In 2024, there are thousands of fintech blockchain solutions, and it might seem like this space couldn’t get any bigger. Industry experts think otherwise. They predict that the fintech blockchain market will grow from $3 billion in 2022, to $58 billion by 2031.
If you believe the numbers, it looks like the fintech blockchain niche still hasn’t reached its peak. The demand for blockchain platforms will only rise higher as will the cost of developing these apps. That’s why 2024 is the perfect time to dive headfirst into the fintech blockchain sector and launch your own DeFi product.
Blockchain in fintech: best use cases
Today, many fintech companies rely on blockchain integration, from small crypto exchanges to the largest banks in the world. Let’s explore the 6 most popular use cases of blockchain in the fintech industry.
1. Crypto payments
Platforms like Coinbase allow users to perform financial transactions with crypto. This includes storing, sending, and receiving digital assets. Mobile crypto wallets such as Trust have become especially popular lately — with them, you can transfer crypto in a matter of seconds. There are also apps like BitPay which allow businesses to receive payments in crypto.
We worked on a mobile crypto wallet called Broex. The app lets users send and receive crypto with just a couple of taps.
We designed the platform from scratch and built an engaging UI and quick user flows, ensuring easy in-app navigation. Then, we developed the app’s frontend: built a simplified login feature and made sure the wallet ran smoothly on both mobile platforms.
2. Trading & investing
Bitcoin’s value is constantly changing, but the demand for crypto-investing apps is growing all the same. Large exchange platforms like Binance and Robinhood are the leading players in that segment. They let users exchange, trade, and invest in digitized assets. These apps usually support lots of cryptocurrencies, provide trading tutorials, and offer exclusive memberships.
3. Insurance
Blockchain technology is also useful for handling insurance claims which can take a long time in a typical offline workflow. Thanks to the automated nature of blockchain, each claim can be processed without any human involvement. Customers won’t have to wait weeks for a decision, and insurance companies will have more time to focus on complex cases.
Platforms like Etherisc offer development protocols that allow insurance companies to build their own blockchain solutions with features like automatic claims and smart contracts.
4. Lending
Crypto lending has become very popular — and profitable. For example, Aave, one of the largest decentralized lending platforms, earned over $186 million. in 2022. This success is explained by the app’s user-centric strategy. Lenders on Aave can earn a stable income in the form of interest payments. And loaners don’t need to provide any info about their credit history, making the whole process very quick.
5. Fraud detection
Transparency is one of the biggest strengths of blockchain technology. All financial operations on the network are automatically logged, and everyone involved can access this info. This makes it a lot harder for people to cheat the system and get away with fraud. This safety mechanism can help companies in the financial sector avoid serious legal trouble.
6. Identity verification
Our personal data is getting leaked almost every day and centralized organizations can’t do much about it. That’s why blockchain has become so popular as it gives users greater control over their own info. Decentralized identity verification platforms let you safely store private data such as your passport number and date of birth. This info is cryptographically protected and can be verified by those you share it with, including financial institutions.
How blockchain is changing fintech
Blockchain offers new opportunities for fintech businesses that aren’t available on traditional, centralized platforms. Here’s how blockchain is transforming fintech:
New business models
Blockchain gave rise to new business models such as crypto lending, token trading, and play-to-earn. Today, fintech companies can create decentralized platforms with lots of features, from P2P transfers to cryptographic encryption. All of this can be monetized through premium subscriptions, commission fees, and even access tokens. As blockchain networks evolve, even more business models will appear.
At Purrweb, we’ve worked on Kaiju, a crypto wallet with gamification features. It combined standard crypto wallet functionality with Web3 games and NFTs.
When designing the platform, we chose an eye-catching color palette to better engage users. We even designed the games themselves and implemented social features like player leaderboards and in-app rewards.
Web3 games made the app not only functional but also fun
Increased user engagement
Blockchain apps in fintech often include gamification elements like milestones and exclusive rewards. This approach helps boost engagement and attract new audiences. On many blockchain platforms, users can even vote to select features that will be added in future updates. If your audience is directly contributing to the growth of your fintech platform, they will be much more likely to stick around for years to come.
New fundraising methods
Republic, a blockchain-based crowdfunding platform, gives investors access to untapped markets, allowing them to finance promising startups at the earliest stages.
Blockchain makes it easier for professional investors to fund startups directly, without intermediaries. They can buy company shares in the form of tokens — digital assets that serve as proof of ownership. These tokens are always in demand, and their high liquidity allows investors to quickly trade them with others. Also, investment transactions on the blockchain can be performed faster than regular bank transfers.
Universal access to finance
Thanks to decentralized financial technology, everyone with a smartphone can access blockchain apps and exchange their real-world assets for crypto. Interest rates for bank loans are only getting higher, so more and more people are gravitating towards blockchain and crypto.
That’s why you can earn a lot from creating a user-friendly DeFi app. If your platform lets clients quickly exchange crypto and offers low commission fees, chances are it’s going to be successful.
Efficient resource management
Blockchain makes it possible to automate almost all business processes in fintech, from client verification to insurance claim processing. This makes it easier for companies to allocate resources efficiently. So, instead of hiring dozens of employees just to approve transactions, you’ll be able to focus on running your fintech business.
Blockchain in fintech: key benefits for business
Now that we’ve covered the impact of blockchain on the fintech industry, let’s look at the advantages of building a DeFi platform.
Automated transactions
On most blockchain platforms, financial operations are automatically checked and approved. This is done through smart contracts — a system that processes every transaction based on predefined rules. That means you don’t have to hire dozens of employees to verify each transfer — blockchain does it for you 24/7.
Chainlink allows platforms in the finance industry to link smart contracts to other data sources. This enables their apps to get accurate info in real time and use it to verify transactions.
Decentralized data ownership
Blockchain-based apps cannot be controlled by centralized authorities whether it’s governments, banks, or tech corporations. In standard web platforms, these organizations usually have access to lots of business data which can put fintech companies at risk. That’s not the case with DeFi — you’ll remain in control of your data and won’t have to rely on third parties.
Here’s one of our DeFi projects — a multicurrency crypto wallet. It’s a MetaMask alternative, the platform is based on blockchain and has a simple yet engaging interface.
When working on the app’s design, we looked at MetaMask to find elements that could be improved. For example, we replaced an outdated burger menu with a more user-friendly tab bar for easier navigation. We also build the app’s frontend, integrating it with blockchain APIs for lightning-fast crypto transactions.
New monetization opportunities
The fintech blockchain space allows you to experiment with monetization strategies. For example, you can make money from smart contracts by offering this feature to clients as part of a premium subscription. Or sell virtual tokens that let users access the more advanced features of your platform. You can even combine these approaches and create a hybrid monetization strategy.
Top blockchain fintech platforms
The fintech industry is full of blockchain platforms. Let’s look at some of the best examples.
MetaMask
MetaMask is an all-in-one platform for decentralized finance based on the Ethereum network. It offers users a crypto wallet and a browser extension that lets them access blockchain apps. Think of MetaMask as a bridge between the traditional internet and the DeFi world.
A big advantage of MetaMask is its high security. It doesn’t upload any of your private keys online, instead, they’re stored only on your device. So if the platform is ever breached, your crypto should still be safe from hackers. Also, MetaMask is cross-platform and can be used on almost any device.
CashApp
CashApp is one of the best-known mobile platforms in the DeFi world. It lets you send crypto in just a few taps, thanks to its simple and elegant UI. You can also link your credit card to buy Bitcoin directly in the app.
CashApp gained mainstream appeal because it takes low fees for P2P transfers. The platform also offers a 0% commission rate for trading 1,800 stocks. This makes it a great option for hobbyist investors.
ChainAnalysis
Blockchain can be an effective business tool, and B2B platforms like ChainAnalysis provide fintech companies with custom decentralized solutions. This platform analyzes crypto transactions in real time and determines which blockchain addresses are trustworthy. It also gives insights into crypto trends and notifies businesses about financial risks.
Fintech companies can use ChainAnalysis to detect fraudulent transactions, verify customer info, and move towards automated workflows. This tool can also help businesses avoid legal problems since it alerts them about potentially dangerous transactions.
Coinbase
Coinbase is one of the best-known blockchain apps and the most popular crypto exchange around. Many people start their crypto journey with this platform. It’s easy to use, beginner-friendly, and offers handy in-app tutorials.
The main advantage of Coinbase is its clean interface which allows you to find every core feature at a glance quickly. Users can buy, swap, and transfer crypto, without having to go through countless app screens.
Onyx by JPMorgan Chase
One of the largest banks, JPMorgan Chase, offers its own blockchain fintech solution called Onyx. It enables business operations with crypto and allows companies to simplify digital payments. JPMorgan Chase is a reputable bank, and its blockchain platform helps users comply with regulations. It also gives them access to financial services from other banks.
In the past, JPMorgan also has partnered with Microsoft to create Quorum, an open-source protocol based on blockchain. Companies in the fintech sector use it to build decentralized apps with secure payments and built-in smart contracts that automatically verify transactions.
What issues does blockchain address in fintech?
Modern fintech companies face many challenges. Let’s list some of those problems and look at the solutions blockchain can offer:
Poor data security
The financial industry has many moving parts — countless data are exchanged between banks and users 24/7. This info needs to be protected, and many centralized platforms fail at this task. Blockchain doesn’t have any isolated parts that can be easily targeted. Each node is connected to another and contains a full copy of the entire blockchain network. This reduces the risk of data breaches and protects financial info from hackers.
Identity theft
Platforms like Civic make it easy for financial institutions to verify their clients’ identities. This data is hard to forge since it’s recorded on the blockchain and cryptographically encrypted.
One of the biggest challenges in centralized finance is identity theft. Criminals steal the personal info of bank clients and exploit it to their advantage. With it, they can fool banks into giving them their victims’ money.
To help solve this problem, blockchain provides an additional level of security both to financial institutions and their clients. Decentralized identity verification platforms store and encrypt users’ personal data which can be verified by trusted sources like banks and insurance companies. This reduces the risk of identity theft and protects fintech businesses from compliance issues.
Lack of transparency
The financial world is often associated with hidden schemes. While most of that’s false, financial institutions usually aren’t that transparent. Blockchain lets you pull back the curtain and see what’s going on in the fintech industry.
Every transaction on blockchain networks is recorded in an immutable ledger. It cannot be altered by anyone, not even by those who started it. These records are publicly accessible, and you can use them to verify completed transactions.
Low transaction speed
In traditional banking, transferring money between businesses and clients can be complicated. Even today, many banks approve every transaction manually which can take several days.
Blockchain’s smart contracts can help solve this problem. These autonomous systems verify transactions around the clock which often allows companies to transfer money faster compared to regular banks.
What’s next for blockchain in fintech?
Blockchain’s brightest days are still ahead. As more corporations like IBM and Amazon launch their own blockchain solutions, the future of decentralized apps is looking better than ever. By 2030, the global DeFi market is expected to grow at an annual rate of 46%. Any fintech company can make a lot of money from building a blockchain platform, and those profits will only increase over time.
Creating a blockchain app can be complicated. At Purrweb, we’ve worked with many fintech companies, helping them develop DeFi apps — like this crypto wallet. If you want to tell us about your blockchain project, fill in the form below, and we’ll give you a development budget estimate within 48 hours.
