The Fintech industry has gone through an enormous transformation in the last few years. The innovation and the never-ending desire to achieve high-quality system operation and customer satisfaction have led to lightning-fast payment processing, better wealth management, alternative lending services, and overall efficient financial systems.
Fintech has been around for decades, however, since the advent of blockchain technology in 2008, fintech has become one use case in the onslaught of disruptive uses that blockchain brings to the table. Blockchain technology is doing more for Fintech than we had anticipated. The financial technology landscape is now thriving globally with investments increasing steadily from $19.9 billion to $39.4 billion between the period 2014-18 at a CAGR of 18.5 percent.
Blockchain has found great uses in the financial industry, and a report by BIS Research suggests that more are to come. The technology could save the financial institutions over $40 billion in infrastructure, IT, third-party fees, operational, and administrative personnel costs every year.
Fintech specific use cases:
Blockchain technology has captured the attention of millions around the world, and it is now rewriting the rules of the finance game altogether. While the earliest use of blockchain in the cryptocurrency brought the whole financial system into question, its impact on fintech is now bringing finance into the 21st century. A PwC survey revealed that 77 percent of fintech businesses plan to adopt blockchain technology as part of their production system by 2020.
Below are some of the ingenious Fintech startups that are bringing finance into the 21st century by putting their service offerings on the blockchain.
Auditchain aims to revolutionize the audit and accounting industries by developing a decentralized continuous audit and reporting protocol ecosystem. It presents balance sheets, cash flow statements, and other reports in real-time using the blockchain technology. The technology will not only remove the current inefficiencies in audit and accounting, it will also improve transparency and safety across the industry.
Up until now, a continuous audit has been limited to enterprise internal audit and reporting. Auditchain will enable enterprises to provide regulators and stakeholders with the highest levels of audit assurance. Real-time reporting will allow for faults to be detected quicker, and timely rectification could potentially prevent a financial crisis. With a competent team and solid foundation, the startup is leading the race of continuous real-time reporting.
Founder: Jason Meyers
Based in: Baarerstrasse, Switzerland
Specialty: Decentralized continuous audit and real-time reporting
Civic removes the fear of cybercrime and identity theft. It provides instant, secure and affordable access to identity verification leveraging the unlimited power of blockchain. It allows people to control the use of their personal information which is secured and protected using cutting edge identity verification technology. The company successfully raised around $33 million in the June 2017 token sale, and now aims to build identity.com – an open source platform for identity verification services built on the blockchain.
As we move towards an increasingly data-driven world, the threat to personal data getting compromised also increases. We share data with banks, companies and online stores, etc. so even if we are vigilant in our online activities, the information at these companies can get compromised. Civic uses hashing algorithms in encrypting client information which will significantly reduce the access of malicious interceptor of sensitive payloads. The company won the Best New Startup Award at the K(NO)W Identity Conference 2017; so, their credibility and effectiveness are in no doubt.
Based in: San Francisco, United States with offices in South Africa, Brazil, Germany, and Latvia
Specialty: Digital identity risk management
Lendoit is the first decentralized peer-to-peer lending platform using blockchain technology. The company seeks to change the way loans are given out and received. Lendoit is also trying to enable cross border loans which make this startup the first of its kind.
With no central authority to get a loan from, this platform matches borrowers directly to lenders without the need for an intermediary. Borrowers are able to get funds at lower interest rates by simply filling out a loan application on the Lendoit marketplace. This makes the whole process a lot easy and stress-free. Bad borrowers are disqualified using data from real-world score providers, which leaves only the trusted ones to apply for a loan.
In case of defaulted loans, Lendoit uses its Smart Compensation Fund Contract and the local collector’s auction system and the fact that lender can lend money to many people at once, spreads the inherent risk that exists in a loan.
Founders: Avi Ben David, Ori Erez
Based in: Givatayim, Israel
Specialty: P2P lending
Circle is a peer-to-peer payment app which aims to become “Gmail of casual payments.” Circle has been in existence since 2013 as a blockchain company, and while it intended to enable cheaper currency transfers, the new consumer offering has allowed it to reduce their processing fees to a minimum. With Circle, sending social payments to anyone is now as simple as sharing a text message or email. Their iMessage application on iOS makes it possible for iOS 10 users to send money – both conventional and cryptocurrency – to anyone using their phone’s texting app.
Circle received 128 million euros in private funding from various companies and recently crossed the $1 billion transaction processing mark. After establishing Circle China to capitalize on the growing Chinese middle class, Circle moved to acquire the world’s leading cryptocurrency exchange Poloniex.
Circle now plans to expand the Poloniex platform further and make it a robust multi-faceted distributed marketplace that can host tokens representing anything of value. The founders envision that it could include real estate, physical goods, fundraising and equity, music and literature and much more.
Headquarters: Boston, Massachusetts, United States
Specialty: peer-to-peer payments technology
Bitpay is the largest blockchain payment service provider, founded in May 2011 by Tony Gallippi and Stephen Pair. The company recently completed its USD 40 million series B round of funding. Bitpay is currently the largest Bitcoin payment processor in the world with over $3 billion in monthly transactions from industry-leading merchants around the world. They have created a seamless and secure bitcoin payment experience that is used by hundreds of thousands of bitcoin users every day, and the introduction of BitPay Visa Card in 2018 made things even easier for them.
Bitpay continues to expand their services into new regions and get into new strategic partnerships. They recently partnered with Bithumb to connect businesses between South Korea, Europe, and the US. They also teamed with Sharps Pixley who is now using Bitpay to allow customers to convert their gold into Bitcoin.
Based in: Atlanta, Georgia, United States
Specialty: Cryptocurrency payment system
These are the 6 Fintech startups that are taking advantage of blockchain technology. As blockchain is still in its infancy, we will see more businesses and startups utilizing the underlying principle of the blockchain.