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    FinTech Trends And Projects To Watch In 2019

    According to a significant study conducted by the Accenture consulting company, over half of all top managers are admitting that Blockchain is on the way to play a key role in the success of financial institutions in the near future. According to the company’s analysts, the world banking sector will save up to $20 billion by 2022 via the implementation of the Blockchain.

    As Accenture’s website highlights “Nine in 10 executives said their bank is currently exploring the use of blockchain.”

    After a glum 2018, look for startups tackling massive opportunities like insurance via automated smart contracts and fee-less remittances transactions to reenergize the fintech sector. Those efforts should start to pay off in 2019.

    After flying under the radar while developing a fully operational Minimum Viable Product, Malta-based FOTON dropped a bombshell in December, with a recent press release announcing the launch of a decentralized crypto-bank designed for multi-currency transactions featuring a built-in fiat and cryptocurrency exchange system and instant contactless payments for goods and services worldwide to create a stable and flexible ecosystem that will enhance scalability for all services for financial assets, exchange solutions, cards, accounting, and business/customer services.

    “We are creating the ecosystem that will prove to be the impetus and basis the crypto market needs to make the effective transition to becoming the next global banking system,” as stated by Andrey Pashkevich, CEO and Co-founder of FOTON.

    Watch out for FOTON, and “blockchain mobile banks” more generally, in the year ahead.

    What does Blockchain really mean for financial institutions and banks?

    In a nutshell, Blockchain provides a particularly high level of safety in storing and transmitting data, along with transparent network infrastructure, decentralization and low cost of operations. All these features contribute to lead in high-demand, even for a highly regulated and somehow conservative industry - banking. At the same time, the key structure of banking system with the involvement of a number of mediators, a system particularly expensive, could be effortlessly replaced with a mediators-free Blockchain system that would provide customers and banks with cheaper services. Here are several use cases that suggest that it’s possible.

    Blockchain could be a double-edged sword for banks. On the one hand, banks and financial institutions could save billions in cash by substantially reducing processing costs. For example, Santander, a Spain-based bank, calculates the potential savings of Blockchain at $20 billion a year. On the other hand, the lower costs of setting and operating a bank have attracted many new FinTech startups to the market. Financial institutions are also hedging their bets by directly investing in FinTech startups. In 2016, Venture Capital Funding to global FinTech companies hit a record of $13.6 billion while overall investment in FinTech companies totalled at $24.7 billion, according to KPMG.

    The second larger use case of Blockchain within the banking industry is the speed up of bank-to-bank and international payments. The current SWIFT bank transfer system, according to many analysts from large financial companies, could easily and successfully be replaced by Blockchain technology.

    Another major area in which banks will be able to implement Blockchain is the creation of a client identification system based on the distributed ledger technology. This is highly important as the total of banking companies are required to perform Know Your Customer (KYC) activities when processing applications. Blockchain enables users to be identified on a single occasion, and all available information can be stored securely and be accessible to other banking companies - if permission was granted by the data owner.

    Even banks in developed countries face unreliability and vulnerability issues. State regulators ensure private bank deposits in traditional currencies. That depicts a centralized banking model. A distributed system based on Blockchain technology for loans and deposits is decentralized e.g. the deposits are not controlled by a certain central organization. By implementing decentralization in the banking system, the possibility of bankruptcy is gradually minimized.

    Bank of the Future

    The feature of the future bank is doubtlessly flexibility. Banks will be needed to replace pin numbers and passwords with biometric authentication, allowing customers to check balances and access investments securely via mobile devices. These alterations may reduce memory problems and rather fraud risk for the bank. Furthermore, banks also have to turn to new technologies such as machine learning and data analytics. These technologies will enable them to provide customers with highly personalized and customized products and services that have been adapted to the current economic situation. To date, the concept of Mobile Banks is rising in the European Territory with key players like N26, Revolut, and TransferWise.

    Why mobile banks have been proved really successfully and how much they raised?

    "Mobile banking usage is skyrocketing as more consumers experience the benefits of greater convenience, speed and financial insights driven by new app features and upgrades," said Alice Milligan, Chief Digital Client Experience Officer, U.S. Consumer Bank, Citi. "Over the past year we've witnessed this increase in engagement first-hand, with mobile usage in North America increasing by almost 25 per cent, and we don't see this trend slowing down any time soon."

    According to the same study, 46% of consumers (in Millennials the rate reaches 62%) have increased their mobile banking usage in 2017. 81% are now using mobile banking nine days a month, while 31% mobile bank 10 or more times per month.

    Additionally, 91% of the users prefer using their app rather going directly to the psychical branch, while 68% of Millennials see their smartphones replacing their psychical wallets.

    Milligan added: "At Citi, we launched over 1,000 digital features in the U.S. in 2017, a nearly 500 per cent increase over the previous year. In recent months, we have introduced a number of features to further enhance protection and security, such as face ID sign-on for the Citi Mobile App on iPhone X and email notifications when we detect unknown attempts to access customers' accounts.

    Beyond time-saving, mobile banking customers are now more confident that they know the exact balance of their account than non-mobile banking users. 91% have experienced additional value from mobile banking, including awareness of their financial situation (63%), fewer concerns about managing their finance and a better understanding of banking services offered.

    Which banks have already adopted blockchain technology?

    Banks are inherently slow in adopting any new technology, but actually been exploring various use cases for some time now. According to CEBNET, of the 26 publicly listed banks in China, 12 have already adopted blockchain technology for various use cases within their systems. The total number of banks which use or plan to use Blockchain technology is no less than 200, as stated by a crypto trader and the owner of the Hackernoon blog Mappo. Among them are such giants like BNP Paribas, Bank of America, Credit Suisse, Santander Bank, and UBS. This data demonstrates the demand in the banking industry for the adoption of blockchain technology.

    The new generation of blockchain banks

    This trend has led to the creation of 100% blockchain powered banks. Just to name a few the list includes but is not limited to FOTON Bank, DOT Bank, and Bankera.

    The founders of the first one defined six problems which significantly hinder the effectiveness of the modern banking system. These are overregulation, limits on money transfers, privacy issues, and control issues over accounts, service unavailability, and excessive central bank’s dependence. Additionally, FOTON Bank spots some certain problems with cryptocurrencies usage such as legal constraints, lack of established operational framework, increased volatility and speculation and complexity in use. To solve these flaws the company has to build the entire next-gen financial ecosystem.

    What to expect from the Blockchain banks during 2019?

    Blockchain Technology is expected to be a disruptive catalyst - that will eventually alter traditional banking. “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value,” said Don & Alex Tapscott, authors Blockchain Revolution.

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