The invention and development of blockchain and its related technologies benefit from the rapid development of the computer industry: 1. The processing speed of computer chips is greatly improved; 2. 2. The cost of storage devices has been significantly reduced. Blockchain technology has spawned many technologies, and the financial services industry has also benefited a lot from blockchain technology. So, is disruptive blockchain technology the future of financial services?

Why is blockchain disruptive to finance?

Valid blocks will be appended to the main blockchain once they are recognized by consensus across the network. A blockchain is a data structure in which blocks containing transaction information are linked from back to front in order. Chain of these features make the block chain fields become the new hot spot for innovation entrepreneurship, there is no doubt that block chain technology integration will expand the application of the new space, logistics, manufacturing, information service chain technology are introduced, such as blocks, but there is no doubt that the financial sector is key battleground of block chain technology, the world has many Banks and other financial institutions to introduce block chain technology, Improve the efficiency and quality of trading and settlement services.

With the emergence of new technologies and the development of consumer demand, the focus of international investment banks on the fintech industry has also changed significantly. Startups in capital markets, wealth management, and SME services have been their favorite investments since 2018. But it's worth noting that the top three most popular investment categories in 2021 were capital markets, wealth management, and blockchain & digital assets. And the number of investments in the category of blockchain & digital assets has steadily recovered after 2015. International giants such as jpmorgan Chase, Goldman Sachs and Citigroup have also laid out the blockchain field. A number of global banks have publicly stated that they are exploring the improvement of blockchain technology for banking business.

Various characteristics of blockchain provide trust mechanism and have the potential to change the financial infrastructure. All kinds of financial assets, such as equity, bonds, notes, warehouse receipts, fund shares, etc., can be integrated into the blockchain ledger and become digital assets on the chain, which can be stored, transferred and traded on the blockchain. The disintermediation of blockchain technology can reduce transaction costs and make financial transactions more convenient, intuitive and secure.

The combination of blockchain technology and financial industry will inevitably create more and more business models, service scenarios, business processes and financial products, which will bring more impact on the development of financial markets, financial institutions, financial services and financial formats. With the improvement of blockchain technology and the combination of blockchain technology and other fintech, blockchain technology will gradually adapt to the application of large-scale financial scenarios.

Blockchain technology can solve the pain points of the financial industry, while traditional financial services are difficult to effectively solve the core pain points such as information asymmetry, complicated and redundant processes, and high cost of information verification. As a digital, interference-proof account, blockchain technology fulfils the core function of the financial industry: the secure storage and transfer of value. In addition, the data on the blockchain is distributed, and each node can obtain all transaction information. Once changes are found, the whole network can be notified, tampering can be prevented, and it is easy to trace. It can play a role in the management of financial identity information, the construction of trust mechanism, and the credit information chain of small and micro enterprises.

In the field of payment, the application of blockchain technology helps to reduce the cost of reconciliation and dispute resolution between financial institutions, thus significantly improving the processing speed and efficiency of payment business, which is especially obvious in the field of cross-border payment. In terms of asset securitization, relying on the characteristics of decentralization, openness and sharing of blockchain, blockchain securities trading system can improve the efficiency of securities product registration, issuance, trading and settlement, and effectively ensure information security and personal privacy.

Blockchain replaces the centralized way of trust creation through the consensus mechanism, so that any two nodes can carry out peer-to-peer transactions without relying on any central platform. Peer-to-peer transaction mode does not require the intervention of a third party, which greatly reduces the possibility of errors in the process of information transmission, thus improving the efficiency of information transmission. In addition, the peer-to-peer transaction based on blockchain technology is automatically confirmed and executed by the computer program, that is, the transaction confirmation and clearing and settlement are completed at the same time, which greatly improves the efficiency of financial transaction and settlement.

The future fintech revolution is still the general trend. With the continuous maturity of blockchain technology, the integration of finance and blockchain will be deeper. Blockchain has great application potential in fintech, which is the inevitable choice of the industry in the future.

Disruptive blockchain technology is the future of financial services!

For the financial industry, the introduction of blockchain technology will bring many benefits.

The essence of finance is to finance funds. Traditional financial institutions are more like financial intermediaries, which build a bridge for the exchange of needed funds between the demanders and the suppliers, promote the effective flow of funds and realize the maximum value. However, there are some disadvantages in traditional finance: information asymmetry leads to low efficiency, high cost, expensive, slow and difficult capital flow in traditional finance; The standardized financial products it provides cannot study the capital demand of enterprises according to the law of production and operation, so it cannot provide personalized financial services.

The addition of blockchain technology can effectively solve the above problems.

On the one hand, blockchain has the characteristics of decentralization and disintermediation, which can break through information barriers and smooth communication channels between the supply and demand of funds. On the other hand, the unique smart contract system of blockchain can establish the trust of both parties and streamline the steps of financial activities, so as to improve efficiency, reduce costs and reduce risks. It is similar to a transportation hub, when we build a crossroads, only two directions of traffic can be opened at a time; However, once a vertical and vertical three-dimensional traffic system is established, the channels that can be opened to traffic will be connected in all directions, and the accumulation of funds and low efficiency will no longer occur, so that the funds can find the most efficient application direction.

The transformation of the financial industry by blockchain is mainly reflected in four aspects, namely: verifying customer identity, digitization of assets, integration of payment and settlement, and restructuring of regulations.

1. Verify the customer's identity

First of all, verifying customer identity is for the need of financial security and anti-money laundering.

The traditional financial industry needs to review the identity of customers, sources of funds, flows of funds, customers' business and risks, and track the use of customers' funds, which leads to disadvantages such as long audit time, slow approval speed and consuming more energy. And we know that blockchain technology has the characteristics of tamper-proof and transparent data information, which ensures the sharing and security of information, so as to reduce the link of customer identity verification.

2. Digitization of assets

Secondly, the digitalization of assets is gradually popularized in the information age, which effectively improves social efficiency. However, the problems in the current operation mode are as follows: on the one hand, customers have doubts about the trust of institutions and are reluctant to expose all asset information to relevant institutions; On the other hand, the digitalization of assets has boundaries. Without the boundaries, information barriers will be formed between institutions, like islands, which are difficult to realize communication and interaction. And we know that the characteristics of blockchain are decentralized. By integrating different financial institutions into a unified digital platform through a smart contract system, borders can be eliminated and the free flow of asset information can be realized.

3. Payment and settlement integration

Thirdly, in terms of payment clearing, China's payment clearing system is mainly dominated by the central bank. Although WeChat, pay treasure to promote the flourishing of mobile payment system, implement the mobile payment rate of the world's first, but the clearing system behind the mobile payment is not much change, is a kind of capital within the payment institutions lag flow pattern, real-time trading system and reconciliation system are separate in the short term, it is easy to cause low efficiency.

For example, when Xiao Ming buys a commodity from a merchant on Taobao and uses the Alipay system to settle accounts, the direction of capital flow is "buyer's bank-buyer's Alipay pay-seller's Alipay - seller's bank". On the books, the two sides can see that the funds have been circulated, but in fact, behind the scenes, they need to complete the clearing between banks under the guidance of the central bank's clearing system to realize the real flow of funds, and this link is behind the book.

Blockchain solves this problem by allowing people to use cryptocurrencies to represent the actual amount of money that has occurred after each transaction, and smart contract systems that can change ownership of cryptocurrencies in real time enable integration of clearing and payment. In this case, the clearing system can no longer rely on the central bank, avoid the delayed clearing process, make the risks in the transaction process more controllable, improve the payment efficiency, and avoid the high commission fees between banks and across borders, which can be said to kill multiple birds with one shot.

4. Regulatory restructuring

Finally, after using blockchain for financial transactions, the mode of financial operation will change dramatically. This means that the current financial operation rules, legal standards and supervision methods are no longer applicable. In this case, the introduction of blockchain technology has played a role of "reverse force", pushing the country and relevant institutions to introduce a financial industry standard system suitable for the application of blockchain technology, continuously establishing a perfect system of relevant laws and regulations, fundamentally eliminating the current chaos, so that the regulatory system can keep up with the development of technology.

As Professors Peters and Panayi of the University of London argue: "Blockchain technology has the potential to disrupt world banking by improving and facilitating services such as global currency exchange, smart contracts, automated bank ledgers and digital assets." In addition, "blockchain technology can be applied in many areas, such as transaction processing, government cash management, commercial bank book management, financial asset liquidation and other areas."

Blockchain technology contributes to the development of the financial industry, facilitating the efficient flow of funds and maximizing value. Therefore, blockchain technology will be the future of financial services, with disruptive potential, but the development of blockchain in the financial industry, there is still a long way to go.