Fintech and Blockchain as the Future of the Financial System

Алёна Инжеева
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Fintech is transforming the financial industry, and organizations developing financial blockchain technologies now have a significant advantage. The speed and scope of these changes will depend mainly on how quickly and easily users will embrace this new economy. Finance was one of the first industries to implement IT solutions, and ordinary users benefited from it. Fintech is innovative technologies that companies can use to improve their work. Blockchain plays an important role in this.

How blockchain is changing the financial ecosystem

Blockchain in fintech can enable a more efficient banking experience, from reducing costs to minimizing bureaucracy in the traditional financial system, which will benefit both banks and customers. Blockchain will help counter fraudulent transactions by allowing fintech companies to exchange secure data over a decentralized network. All this will ensure a high level of transparency of financial institutions. 

The banking sector is now experiencing a digital boom. Blockchain technologies are actively used to automate and digitalize business processes. We asked experts where exactly they found application and what exactly was the connection between fintech and blockchain. 

Vasily Kudrin, Partner and Chief Investment Officer of Lybrion International Group, agrees that the blockchain has found active acceptance and application in fintech, primarily in monetary circulation and in decentralized finance. Historically, banking activity has been centralized, so the development of this area is along the lines of entering the realm of alternative and competitiveness. Due to legal restrictions, It is difficult or impossible for banks to use web3 developments in order to improve their processes and create new products. Most banks do not understand how to perform integration here and do not take rational actions. The most advanced of them are still opening their own blockchain divisions, which are in the process of accumulating competencies, or they are acquiring shares in centralized organizations serving the crypto market, in particular, shares in exchanges.

According to the expert, the most successful blockchain projects in DeFi, which are replacing traditional banking products and processes, are in the first places in the rankings of CoinMarketCap and CoinGecko, and there is no point in looking for peculiar stories here. These are the ecosystems that transform the financial sector.

Danatar Atajanov, Brand Manager of the OXLY.IO crypto platform, agrees that fintech is at the forefront of the financial system. The expert also notes that finance or accounting is exactly the area where the blockchain is being actively used. He says,

“Each record is unique and is in the public domain, so accounting becomes very simple and, most likely, can be fully automated. This can significantly reduce the cost of human capital. In addition, the blockchain can provide everyone with equal access to financial services, no matter who you are. It simply follows predefined rules that are the same for everyone.

“I think that the speed and transparency and security of transactions soon will allow the blockchain to replace traditional banking instruments in payments, especially cross-border ones. While the blockchain is taking its first steps in this direction, it is the future.”

Roman Shtykh, business person, CEO at MetaLamp, believes that in relation to modern finance, you need to understand that now the market is not pushing technology, as it was 15-20 years ago, when the entire banking sector was automated and it created a demand for technological solutions, but vice versa, technology drives finance. It is quite obvious that new technological solutions create a trend for the development of finance, and financial institutions are forced to get adapted to the technological advancement. The blockchain is perhaps the most striking example of such an impact of technology on the industry. One can observe major players (Mastercard, Visa, Google, the Ministry of Finance of the Russian Federation, etc.) learning to interact with this phenomenon and trying to adapt to it. The State is thinking about regulation, and financial organizations are thinking about how to ride on the created financial flows. You need to understand that blockchain technology is used not only in finance. But considering blockchain specifically in the context of crypto assets, of course, blockchain is included in the concept of fintech, for it is a technological solution for the financial sector.

According to the expert, the question “What application of blockchain technology have they found in the banking sector?” is not entirely relevant because banks, as they are perceived by everybody, work essentially differently. Being inherently large centralized corporations with specific decision-making centers, they cannot adapt blockchain technologies for themselves since they are decentralized automated financial operators. Therefore, now all the traditional financial institutions of the world are puzzling over how to competently integrate into the entire blockchain infrastructure, but there are a lot of fundamental problems here. Blockchain was supposed to be the "killer" for banks, banks essentially being intermediaries between people. Why do you need intermediaries when there are automated systems that could take on the same obligations, but do not charge you huge commissions.

Roman Shtykh adds,

“If I were describing the relationship between traditional financial institutions and blockchain, I would say that they are at the stage of the early “candy-bouquet” period, where traditional institutions are the cavalier, and blockchain is rather a cool-minded party. This is dictated by the fact that blockchain develops and feels confident without a traditional financial system, while traditional institutions simply lose money and lose part of the market.

“There are countless examples of projects based on blockchain technologies, and something new appears every day. There are projects that technologically rethink traditional money exchange mechanisms, such as exchangers, exchanges, loan projects (for example, Binance, MakerDAO, Uniswap). But at the same time, projects are emerging that fundamentally change the approach to investment and risk and guarantee management. You can write separate articles about each of these projects because the services may have mechanics that are not that obvious.”

Vyacheslav Tsurka, CEO of Tiger.Trade, agrees that blockchain technology has been actively used in the financial industry for a long time. By 2026, the market for blockchain banking services is projected to be above $22.5 billion. According to Thecoinrepublic, over 20% of US banks, including network giants like Citi and JP Morgan, have integrated blockchain into their financial architecture. Being traditionally at the forefront of financial innovation, banks are looking to upgrade their technology in order to improve the security of transactions. Besides, thus they reduce the transaction and data storage costs. 

Another point that has not yet begun to be implemented is a complete immersion of financial institutions in the blockchain, wherein a bank does not simply have embedded blockchain technologies inside a standard architecture, but can provide a full range of services in the metaspace. But can modern digital banks do this? Unfortunately, a modern digital bank is not much different from a bank with offline offices. But it is clear that most digital banks that we know will handle DeFi. And just banking service offices inside meta worlds are of no interest to anyone because this is the same as a mobile banking application in a smartphone.

The expert emphasizes that a traditional digital bank simply cannot enter the metaverse with the old approach. It is necessary to approach the issue creatively, innovatively, proceeding not from a conservative package of banking services, but from the needs of users of the metaworlds. One of the promising areas is loans for the purchase of land in the metaworlds, given that prices for virtual land have increased by 700% in 2021. And this growth is driven not as much by price speculation as by an evergrowing set of tools for monetizing virtual land.

Egor Abramov, Principal of Fort Ross Ventures, does not deny that some companies are trying to use Blockchain technologies to optimize their business processes. He says rather skeptically,

“In my understanding, no one has yet been able to come up with a working business case of this kind. I don't know of any successful B2B blockchain project (successful = profitable, scalable and replicated among a large number of corporate customers). 

“This happens for two reasons. The first is that blockchain "lives" only in a public decentralized space. And corporations are not ready to work on public blockchains and try to make private networks. The problem is that openness and publicity are the main value of blockchain technology. When this is not the case, the reason for its use is not clear, moreover it works poorly and slowly, has a high barrier to entry, etc. The second reason is that blockchain is not a “feature” for enriching fintech services. Blockchain is a technology that replaces fintech in its entirety. These are not complementary, but, on the contrary, essentially incompatible entities.”

Ksenia Artemyeva, COO of the Fast River fintech platform, emphasizes that banking is really actively turning into fintech since modern technologies are being actively introduced. For example, artificial intelligence makes optimal routes for the delivery of financial products through representative couriers. Scoring algorithms assess the creditworthiness of customers, Big data optimizes marketing campaigns. Yet a bank is an institution which is entrusted by people with their money. It must be protected well. Blockchain technologies find their application in banking as a new way of organizing data storage and protection. For example, banks store biometric and other sensitive customer data. The system is based on cryptographic systems based on the blockchain. 

The expert adds that digital signatures are already being actively introduced into the workflow, and the systems are also built on the blockchain. But the possibilities of using blockchain in finance are much wider. The technology can be used as a solution platform for monitoring the financial statements of a bank, improving the quality of auditing, building a reliable document management system, as well as ensuring the exchange of reliable information on cash flow and reducing its cost.

Uses of fintech and blockchain

Let's look at blockchain use cases that can bring real benefits to the financial industry:

  • Reducing the cost of transfers and perforning transactions in a matter of minutes. The transfer of funds or assets has always been a hard process. Sometimes sending just $100 can take forever. With blockchain implemented in fintech applications, sending money, no matter the amount, is much faster. Moreover, blockchain-based fintech applications can significantly reduce transaction costs by enabling direct P2P transactions that eliminate any intermediary.
  • Safety. Blockchain allows users to remain anonymous and also guarantees the protection of personal data.
  • Smart contracts. These are self-sustaining protocols implemented in computer code on a blockchain network. Smart contracts allow you to perform transactions without the participation of third parties with a high level of security.
  • Global network without geographical restrictions. Since the blockchain is based on the Internet, it does not require any special configuration to work. With decentralized systems, blockchain-based fintech companies can turn global transactions into fast, conventional protocols with the only requirement of having access to the Internet.
  • Audit protocols. Building blockchain-based applications will enable fintech developers to create first-level audit protocols. Blockchain provides all the data needed to conduct a fast and secure audit of transactions with the highest level of transparency.

We also asked the experts to provide some examples of successful integration of blockchain and fintech.

Dmitry Noskov, an expert at the StormGain crypto exchange, reminds that banks have been using blockchain actively for a long time in order to protect data, speed up transactions and reduce commissions. There are already quite a few examples of the implementation of such technologies in the work of banks.

For example, IBM has created a special platform based on the Blockchain World Wire technology, to which banks in about 72 countries have already joined. It allows a quick transfer of money to other countries, instantly converting them into tokens and back into fiat currencies. Raiffeisenbank has launched a bank guarantee on the blockchain, which is an alternative to such a guarantee in an electronic message through the Swift system.

Georgy Galoyan, founder and CEO of, shares his opinion on this matter,

“Blockchain and fintech are developing hand in hand. Many banks are already implementing blockchain projects and cryptocurrencies. For example, the well-known bank Revolut started as an online bank, and then it added cryptocurrency. They are the leaders in the market. The banking sector is actively implementing blockchain technologies in Russia as well. There are several banks that have already developed their blockchain solutions, including Alfa Bank and Sberbank. The latter, by the way, even wanted to release its own stablecoin, but the idea did not materialize due to regulation in Russia, which is aimed not at supporting the cryptocurrency, but at suppressing it. According to industry experts, blockchain technologies will not disappear, but will continue to develop actively.”

Denis Smirnov, blockchain specialist, researcher of cryptocurrencies, Liquidity Manager of EMCD, the largest mining pool in Eastern Europe, believes that the mass integration of fintech and blockchain is still difficult due to the lack of clear legal norms and regulation of the industry. The expert, however, notes that banks are actively testing new technologies, including state-owned cryptocurrencies, as well as various systems for transmitting and logging data, which allows us to hope that after a clear regulation of decentralized technologies is enacted, the society expects a "Cambrian Explosion” of new, cheaper, simpler and more transparent fintech products.

Mikhail Alyonushkin, Manager of the 3V FUND fund, is sure that blockchain technologies can help businesses variously and gives a good example, saying,

“Firstly, it will ensure data exchange. Pretty crude, but sharing trusted data will also eliminate data fragmentation, provide a high level of data security, and cut out intermediaries. It will be possible to track and control the movement of goods and services. If we talk about examples, back in 2018, IBM launched its own blockchain network. With this network, food can be tracked throughout the entire supply chain from the producer to the store.”

Marina Zyuganova, Managing Director for Property Insurance at Renaissance Insurance, speaks about the Zunami platform, which is used to work with participants in the logistics market, as an example of blockchain integration into fintech. First of all, the platform ensures the security of data exchange and speeds up all standard processes for making insurance, from cost calculation to policy issuance. The system has a set of features:

1. Accept cargo for insurance in real time. The system completely eliminates the possibility of error due to the human factor. Now the client receives an online guarantee that the cargo has been transferred for insurance.

2. The possibility of data loss, for example, because of accidental loss of documents in paper circulation, disappears. And for the client, the loss of data is the risk that the cargo will be uninsured and in the event of, let us say, an accident or fire, he will have to cover it. The cost of one cargo can reach 150-200 million rubles (3-4 million USD).

3. Multi-parameter calculation takes into account a large list of factors, including such important ones as the risk and the level of reliability of counterparties.

Danatar Atajanov presumes that new projects need more modern and innovative solutions and that they will implement blockchain technologies. He argues,

“Services such as PayPal, Robinhood, Revolut and other fintech startups have been able to offer their users simple, fast and seamless access to financial services, which is a completely new experience compared to legacy banking. Ultimately, I think that blockchain will gradually replace traditional finance. Now the main application of blockchain which we can see in many areas is smart contracts. They allow to perform any of the actions described in the contract safely and impartially without human intervention. This can be performing transactions, starting or stopping processes, maintaining standard indicators or agreed obligations, etc.”

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