We have updated our Privacy Policy, click here for more information.
Thank you
Published: November 4, 2024
Blockchain is a decentralised digital ledger technology that allows for secure and transparent record-keeping of transactions across a computer network. This means that once a transaction is recorded, it cannot be altered. It acts as a single source of the truth, providing immediate and observable information that can only be accessed by permissioned network users.
The technology was initially developed as the backbone for cryptocurrencies like Bitcoin, but its potential extends far beyond digital currencies. A blockchain network can track orders, payments, accounts, production and much more.
Mordor Intelligence suggests that The FinTech Blockchain Market size is estimated at USD 4.66 billion in 2024 and is expected to reach USD 31.84 billion by 2029.
For FinTech companies, understanding blockchain is crucial because it can offer a competitive advantage in a rapidly evolving market. Companies that embrace blockchain have the ability to offer more secure and efficient services, which in turn can attract customers and build trust within the market. Furthermore, as regulatory frameworks around blockchain and cryptocurrencies continue to develop, being knowledgeable in this area can help companies comply with regulations and avoid potential pitfalls.
Blockchain technology utilises cryptographic techniques to securely identify individuals involved in transactions. This is done by creating secure and unique digital identities, with each ID linked to a blockchain record which is immutable and transparent. This is advantageous in FinCrime because financial entities can identify individuals quickly and accurately, which helps in preventing fraud, identity theft, money laundering and other illicit activities.
By using peer to peer transactions and eliminating intermediaries, blockchain reduces the risk of fraud and makes it nearly impossible for unauthorised parties to alter transactional data. This makes it a powerful tool for preventing Financial Crime.
Traditional trade financing techniques often involve lengthy and complex processes that disrupt operations and make liquidity difficult to manage. Blockchain can simplify cross-border operations securely and streamline trade finance transactions, fostering capital markets development.
Blockchain can track commodities in real-time, allowing for better monitoring of transactions. This can help to identify suspicious activities in real-time and prevent money laundering.
Blockchain streamlines compliance by providing an immutable and easy to verify audit trail. This transparency allows data-sharing among stakeholders in real time, which reduces compliance risk with AML and KYC regulations. Smart Contracts, which run on blockchain technology, ensure that compliance measures are consistently applied and updated in line with evolving regulations. This reduces the risk of penalties and reputational damage.
By simplifying processes and reducing the need for intermediaries, blockchain can lower transaction costs.
The transparency of blockchain fosters trust among users, which is essential for combatting financial crime and promoting a secure financial environment.
In summary, blockchain is a transformative technology that is reshaping the financial landscape. Its ability to enhance security, streamline operations, and reduce costs makes it essential for FinTech companies to be aware of and utilise.
By offering blockchain-based solutions, we can assist businesses in harnessing the power of this technology, creating a more efficient and secure financial ecosystem.
First Derivative is available to help. Get in touch today to discuss your FinCrime needs.
Danielle Marley
FinCrime Senior Leadership Team
First Derivative
First Derivative LinkedIn profile
Katie McMahon
FinCrime Senior Consultant
First Derivative
First Derivative LinkedIn profile
