Digital Pratik is the creator, founder, and operator at JorrParivar, a Digital Branding Strategist, Personal Branding, Practitioner, and content creator with a consolidated 400K+ followers on social media with a cumulative audience of his content viewers in billions.
With the advent of new-age tech and advancements, the last couple of years has been marked by massively defining changes across diverse spaces and industries. At the same time, 2021 has also seen a concrete transformation of the World Wide Web (WWW) and triggered the rise of Web 3.0 or Web3, leveraging blockchain technology, artificial intelligence (AI) and machine learning (ML). In turn, this more decentralised and individualised Internet has changed our business and operating models from the ground up, putting pressure on traditional banking systems and financial services companies to break new ground.
Meanwhile, the launch of Bitcoin is already witnessing rapid growth in the financial and technology (fintech) sector. Additionally, the last few years have also seen an increase in the number of new fintech companies and the development of innovative technologies used by several traditional financial institutions. However, with the emergence and development of Web3, the fintech space is undergoing yet another bout of complete change.
In fact, companies and businesses are already feeling the impact of decentralised finance (DeFi) leveraging blockchain technology. The world is on the verge of a new wave of fintech applications and services that will bring about a new Internet infrastructure built on the Ethereum blockchain. This third generation of the Internet will make the industry more efficient and accessible by offering many new opportunities to consume financial services and changing the rules of the game. Further, it enables a more connected and intelligent world for the financial services industry by completely transforming the plans for individuals, businesses and regulators to work together and collaborate. Some of the primary benefits of the new distributed operating model and the convergence of Web 3.0 include –
- Trustworthiness – Web 3.0 will ensure end-users always have complete ownership and control over their online data.
- Accessibility – the user will have access to information as much as possible from anywhere in the world.
- Improved customer journey – Web 3.0 will allow fintech organisations to understand the several evolving needs and expectations of their customers in a much better way.
- Faster transactions – Web 3.0 will provide real-time, secured, and transparent transactions for FinTech companies across the world.
Furthermore, Web3 is more connected and intelligent to understand a user’s context in more ways than one. The combination of user experience and intelligent agents enables large and small fintech companies to provide personalised financial services with less human intervention. In fact, fintech start-ups have automated financial advisors and planners to help users make multiple low-cost, profitable financial decisions. Some even offer digital and wealth management advisory services to the HNWI (High-Net-Worth Individual) market segment. In addition, there are ‘smart wallets’ that can monitor and learn user habits and needs to change and reduce personal financial spending and saving habits.
NFTs for Fintech
The development of Web3 has also paved the way for the rise of non-fungible tokens or NFTs. These NFTs are more than just images on blockchain. They represent digital ownership because they provide proof and assurance of immutable ownership records on a decentralised blockchain ledger. This ensures that central owners cannot take them from you or tamper with their history.
As NFTs continue to become popular, adopting decentralised finance (DeFi) will also allow for smoother trades and provide more secure transactions. For instance, getting financial loans by trading NFTs will be one of the crucial steps toward NFT utilities in the fintech world. This will allow people to use lending/staking DeFi platforms and trade their NFTs for real money. If a borrower is unable to return the money, then that particular NFT will be transferred to the lender automatically. And all this will take place on ‘smart contracts,’ which ensures transparency on blockchain without any middleman.
Anyone that has taken out a loan or run up credit card debt already understands how interest rates work – a lender charges interest in exchange for being able to afford a given financial product. However, blockchain technology offers an interesting way to address two issues associated with conventional loans and has the potential to revolutionise future lending practices. First, it can be difficult for individuals who own cryptocurrency assets to secure traditional loans because banks and other financial institutions have difficulty evaluating the value of digital currencies. Second, lenders charge much higher interest rates than those found through online personal loan platforms in return for providing quick access to money without having to sell their cryptocurrencies first.
What the future holds
Under Web3, we are seeing a paradigm shift from traditional financial infrastructure, which is centralised and controlled by several institutions, to a more decentralised and open system. While it is increasing opportunities for innovation and paving the way to a more inclusive and democratic financial system, these technologies are only a handful of the many things possible.
Furthermore, while, for the most part, Web3 is very beneficial for the fintech industry, it also comes with a few barriers and disadvantages, such as –
- It can be a chunk complex to recognise for beginners.
- Difficult to regulate – Some professionals additionally trust that decentralisation will result in problems in tracking and regulating Web3. As a result, an upward push in cybercrimes is expected.
- Web 1.0 websites will appear outdated.
- Devices over five years old or more will not be able to run Web 3.0. For this reason, in order to use the next version of the Internet, you would require a gadget with significantly higher specifications.
However, with financial and net technology advancing rapidly and giving a start to new businesses, there is a developing need amongst establishments to innovate their offerings and enterprise
fashions and embody those improvements which can reshape the destiny of money, bills and virtual assets. Besides, as fintechs get used to dramatic marketplace changes, guidelines and virtual transformation, banks and other conventional establishments will capture and collaborate with these modern fintechs.
To conclude, experts assume the fintech blockchain marketplace will develop to $6,228.2 million with the aid of using 2023 with a 75.9GR from 2017. A substantial increase such as this isn’t surprising, thinking about the manner Web 3.0 is operating closer to enhancing consumer trustworthiness and accessibility. Other vital blessings encompass quicker and faster transactions, a higher consumer adventure and a robust provider provision.
Moreover, with traditional infrastructure turning more and more obsolete, Web3 might turn out to be the primary way in which the masses engage with economic offerings in the future. This can lead to e-trade that is closer to a greater, open, inclusive, and democratic economic system.