Embracing Web3 in FinTech to Harness Decentralization for Better Security
August 11, 2023
With the evolution of the internet over the years, businesses have transformed tremendously to deliver exceptional customer experiences. However, the internet world is not always perfect as it may seem. It is because it may become fragile to be hacked and attacked by third parties for illegal data misuse, especially in the finance sector.
Though digital transformation in the fintech world has undergone several changes, security and transparency are one of the biggest concerns for the industry still now. To help overcome privacy and security challenges, we need a decentralized financial landscape that is no longer controlled by authorities but by users.
In this blog, we will learn how implementing Web3 in Fintech can help provide full financial freedom to users with top-notch security without worrying about theft and privacy.
How Web 3.0 Technology is Revolutionizing Fintech World?
Web3 is the third version of the internet and is gaining huge attention among businesses that are increasingly implementing it. Reports even say that its market size is expected to increase up to $81.5 billion by 2030, at a CAGR of 43.7%. The best thing about the web3 landscape is that it is a decentralized network, which makes it free from centralized authorities and regulatory bodies enabling users to gain full control over their data.
What makes Web3 in fintech a great thing is that Web3 uses blockchain technology, smart contracts, cryptocurrency, dApps and others that help in making the financial processes decentralized and eliminate the need for intermediaries. Every Fintech Mobile App Development Company are planning to take advantage of Web 3 and its decentralized nature, which aims to build a more open, transparent, and inclusive financial ecosystem for enhanced customer data security.
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Reasons Why Financial Institutions Must Adopt the Web3 Revolution
Many are already aware of the power of Web3 in the technology market that has disrupted many industries with its decentralized nature backed up by blockchain technology, and the finance sector is one of them. Listed below are the benefits that financial institutions can avail by adopting the web3 revolution:
Decentralized Nature
With no governing entities, Web3 services are decentralized in nature making it more secure and free from Internet censorship as well as providing total data ownership, and stringent privacy with cost-effective financial services.
Better Security
Web3 uses blockchain as its backbone to offer better security features than traditional financial systems, which reduces the risk of security breach attempts by malicious hackers & protects the integrity of financial systems.
Also Read: Top 5 Web 3.0 Trends That Will Go Big in 2023 and Beyond
Interoperability
Another reason why brands must adopt Web3 is that it uses open standards and protocols, and this standardization and enablement to decentralized exchanges (DEXs) help in making financial applications work in sync, i.e., better interoperability reducing users’ efforts and time.
Enhanced Transparency
As Web3 is decentralized in nature, users get total transparency and control over their financial records, providing more accountability and lesser risks of fraud. This will help financial firms to win the trust of customers with better transparency and enhanced user experience.
Lower Costs
Web3 services when aligned with technologies like AI, ML, Blockchain, etc. can be a great combination as they can automate financial processes without the interference of any intermediaries, resulting in lower transaction costs and better efficiency.
Top Web3 Solutions That Fintech Industry Can Implement
From the above section, it is quite clear that Web3 technology in the fintech sector has a long way to go as it can be a great help to make finance businesses become future-ready. Before you consult with the experts of the reliable iOS and Android App Development Company for your fintech solutions based on Web3, we suggest you go through the list of Web3 solutions that can help your finance business grow tremendously-
Decentralized Finance Solutions (DeFi)
DeFi was initially brought to replace the traditional finance processes but has grown tremendously with a market size valued at $11.96 billion in 2021 and expected to reach $232.20 billion by 2030. DeFi services help in providing benefits like secure access to DeFi wallet services, flexibility to move assets from one account to another, quicker data update & better transparency.
Decentralized Exchanges (DEXs)
This is like crypto exchanges through famous platforms like Coinbase and Binance with more decentralization. DEXs enable users to trade directly with one another without central authority or third parties involved promoting better control and ownership with security and transparency.
DeFi Derivatives
Derivatives in Web3 are in the form of financial contracts that are developed using blockchain technology. Usually derived from an underlying asset or a reference rate, DeFi derivatives are used for purposes such as hedging against price volatility, speculation, etc. and can be created publicly without restrictions.
DeFi Fund Management
These services allow users to manage their financial assets and take any fund-related decisions including cash flow management, currency exchange, etc. There are 2 types of DeFi fund management- Active where the whole investor team make the decision to invest in the market and Passive where users mimic DeFi holdings to get certain results.
Also Read: How is Web 3.0 Changing The Prospects of Modern Businesses?
Decentralized Payment Apps/Systems
Through these services, users can make any traditional financial services in a decentralized form including decentralized banking, crypto wallets, etc. thereby helping users perform peer-to-peer payments with higher security, transparency, and accessibility.
Closing Statement
As we can see, adopting Web3 technology in fintech solutions can bring a big change to transform financial operations with immense benefits such as transparency, efficiency, security & many more. Additionally, implementing decentralized financial services will help your firm become free from many mediatory regulatory parties.
Since Web3 in fintech is still new in the market, you need assistance from Web3 industry experts of the leading Android or iOS App Development Company to build top-notch DeFi solutions. If you are planning to implement Web3-based fintech solutions for your business, Clavax is the right technology partner for you.
We hold expertise in building your dream app from conceptualization, research, and design to development with post-delivery support. Get in touch with us today to bring your app ideas into tangible business solution.