The world of web 3 is evolving at a great scale, with new innovations coming into the picture regularly. It all started with the birth of the world wide web when the internet was full of static content that was read-only data. Soon after, the upgrade resulted in the advent of web 2.0. With Web 2.0, the internet became interactive. This is the phase of the current internet in which we are living. Web 2.0 is centralized and allows users to interact with each other. The futuristic tech solutions of web 3.0 comprise DeFi, Crypto, NFTs, Wallets, and Blockchain. Last year, about $2.2T was the total market capitalization of cryptocurrency.
The finance industry has long depended on traditional means for its banking services. They are no exceptions from the other industries witnessing the internet’s transitional phase and entering the race to avail some benefits. The centralization of the web 2.0 world has caused the new age GenZ users to completely quit such payment structure and leverage the decentralized mode of payments offered by the Web 3.0 world. Thus, with such a tremendous amount of revenue flowing with the crypto river, we can understand the importance of crypto in today’s finance industry. Read in detail how web3 is revolutionise fintech.
Decentralised finance is the emerging fintech that is based on blockchain’s distributed ledger technology. DeFi challenges the traditional and centralised payment modes by offering peer-to-peer payment modes. By making transactions free of third-party interferences, many users’ private information is secured, and the bank’s payment charges are avoided. Individuals using Web 3.0 Financial services will have a digital wallet where funds will be stored and transferred.
DeFi is, without a doubt, decentralised, but many countries have changed the regulations wherein KYC/AML checks are necessary. Business with unauthorised and unregulated parties is avoided; thus, the government has jumped in to ensure KYC checks.
Let us go through some of the important aspects of decentralised finance:
It is a type of cryptocurrency in which the value of assets is tied to a fixed US dollar value or gold. In a nutshell, stablecoins work with the value of a fiat currency pegged with real-world assets. A fixed amount of money in reserves is taken out every time a user wishes to cash out their tokens.
The DEX comes up when access to non-custodial wallets is required. DEX serves as a peer-to-peer marketplace where users can leverage the trading of cryptocurrencies without needing third-party interference.
Futuristic technologies like Blockchain and smart contracts facilitate DEX. When using CEX, or centralized exchanges, work on the internal matching engine to facilitate trading. DEX leverages the customers to attain full custody of their funds. DEX charges just two payments: trading and network fees. Network fees are actually the gas fees of the transaction, and the trading fees are achieved by the token holders or the liquidity providers, depending upon the protocols.
When talking about the benefits of decentralized exchanges in the finance sector, we can easily conclude that they are numerous, like a high amount of privacy through the evasion of robust KYC protocols. Another important benefit is that multiple sets of parties validate transactions, thus providing complete transparency.
The decentralized autonomous organizations will work on restoring trust in the banking systems that had immensely gone down after the pandemic hit. Through the aid of DAOs, the finance industry can fundraise in the crypto world. In fundraising, banks can leverage DAOs to raise capital amounts from a much wider pool of investors. DAOs also help the banking industry to trade finances and get loans and credits. With the aid of Web 3.0, the need for gatekeepers in the loan industry is totally avoided. DAOs will also digitalize the work previously done on pen and paper by traditional institutions. With DAO, Frauds can be spotted in time as they provide a highly transparent and decentralized. With the aid of smart contracts, banks can leverage the automation of KYC procedures.
The main benefit of Web 3.0 in the finance sector will be an eased onboard facility. Every paperwork the banks take days to process will be done digitally. Web 3.0 will ensure the ownership rights of the user data. What makes web 3.0 different from all of its predecessors is the fact that the users will be the owner and controllers of their online data.
Faster client interaction is possible through AI Chatbot assistance. The Royal Bank Of Canada has been working continuously to train its AI and process real-time data in mere nanoseconds. With Web 3.0 and its amazing set of technologies, banking can be faster and safer.
The times are changing. Flashback to the 90s when opening a bank account required days of hardwork. But the new age Genz bankers prefer to prioritize time. With the automation of the majority of procedures in the world of web 3.0, the customer journey is destined to be positive. Their private data will be safe, and they can leverage better engagements and become loyal customers of the bank.
Web 3.0 stores data in several decentralized nodes, facilitating less use of resources. This fixes the cost management and data fetching tasks.
Web 3.0 is mostly about easing daily living activities via high-technology solutions. Web 3.0 won’t just ease business opportunities but also help sell services to selling non-fungible tokens. This rhymes with more money and business. Doesn’t it?
Blockchain in finance will ease data verification and secure the data in a way that is suitable for the continuous change in consumer needs. The distributed ledger technology distributes data into millions of nodes that cannot be breached easily. Blockchain also regards ownership of data and keeps users’ data theirs. Also, the reformation brought about by smart contracts allows the players to work in automated ways while ensuring trust.
The virtual world of the metaverse will provide an immersive banking experience not just to the customers but also to the bankers. The banking personnel will themselves go through rigorous AI training to teach customers this technology. With the increased machine learning and usage of IoT, financial institutions are planning to introduce new sensors to improve processing abilities. The availability of virtual worlds and real-time data processing can help evade the need to travel to banking institutions. Metaverse will ensure customer protection. Buying and selling in the metaverse will require PII (Personal Identifiable Information) to maintain transparency and interoperability between the numerous metaverse environments.
NFTs can be used as a revenue generator in the Fintech Industry. NFTs enable the Fintech employees to introduce new changes to their products. For example, NFT is used as collateral for getting loans or simply as a security for loans.
The ease of access comes with removing KYC/AML, risk profile, and many more. A user will just require some basic knowledge about the different protocols to be engaged in the infrastructure.
The DefI has an amazing set of incentives where the users contributing to the growth of the network are awarded. Rewards on given on different bases like validation of transactions, protocol improvements and management, and marketing relating strategies. This ensures the community’s long engagement and loyalties.
The era of decentralized finance has begun and what we see now is the breeze of financial applications mostly built on the Ethereum Blockchain. Thus Web 3.0 is the driving force behind the adoption of decentralized means of business in the Finance Industry. It is the revolution of the finance industry that has said goodbye to the old and traditional mode of banking and adapt a more innovative and user-engaging banking technology. Blockchain experts have predicted that the fintech industry will have a gigantic $306 billion in its bag by 2023.
Today’s casino, internet betting, and online trading industries bring in a substantial amount of money—far more than traditional casinos. Users may easily play it from anywhere, and it is more handy, dependable, and quick. There are several online casinos on the market, each with their own special features and capabilities. Many gamers are showing interest to play online games in web3 space hoping winning a game anywhere in the world. We are amidst a progression phase. We still need to discover the full powers of the web 3.0 world. But by the growing interest of financial institutions in this technology, it is clear that the future of finance is safe in the world of web 3.0. With the change of times, traditional banking institutions will become extinct, thus paving pathways for web 3.0’s more open, transparent, and democratic set of financial services.