Future Horizons in Financial Technology
In the rapidly evolving world of finance, major banks and the UK’s Financial Conduct Authority (FCA) have identified several promising blockchain use cases that could revolutionize various finance operations by 2025. These key use cases aim to improve efficiency, security, and transparency across the industry.
Faster Settlement Cycles and Reducing Post-Trade Inefficiencies in Capital Markets
Blockchain technology enables near real-time clearing and settlement of trades, eliminating traditional delays and costly intermediaries. It also supports the tokenization of assets like equities and bonds, boosting liquidity and enabling 24/7 trading platforms. Companies such as Nasdaq are exploring blockchain for digitizing shares and automating compliance.
Cross-Border Payments
Blockchain networks like Ripple facilitate real-time international transactions by removing middlemen, reducing costs, and increasing speed and transparency in remittances and payments globally.
Decentralized Finance (DeFi)
Smart contract-driven decentralized platforms provide peer-to-peer lending, borrowing, and trading without traditional financial intermediaries. Platforms such as Aave, Compound, and Uniswap showcase the expanding role DeFi holds by increasing access to financial services and growing trading volumes.
Digital Identity Management
Self-sovereign identity (SSI) frameworks on blockchain offer secure, privacy-preserving verification systems. Finland and Estonia are pioneering blockchain-based national digital ID systems, which help banks verify customer identities quickly while minimizing data breaches.
Stablecoins and Central Bank Digital Currencies (CBDCs)
Major financial institutions view stablecoins like USDC as tools for efficient, low-cost payments and transaction settlement. Governments, including China and the EU, are actively piloting blockchain-powered CBDCs that integrate regulatory oversight with digital currency benefits.
These use cases demonstrate how blockchain is being embraced to streamline settlement, enhance security, reduce costs, increase transparency, and provide more inclusive financial services, responding to the financial industry’s demand for innovation while meeting regulatory scrutiny from bodies like the FCA.
News Briefs
- Our firm has worked with the European Commission on a three-year CrowdfundRES project, resulting in a report titled "Unleashing the potential of crowdfunding for financing renewable energy projects".
- GP Bullhound Fund IV made a SEK 25 million equity investment in Swedish company, Quixel AB, with our firm's involvement.
- The FISMA report, co-edited by our firm and the European Crowdfunding Network, discusses market and regulatory obstacles to cross-border crowdfunding in the EU.
- The first optional crowdfunding regulation on a European level was based on the FISMA report.
- The report looks at the obstacles to cross-border development of crowdfunding in the EU.
- The FCA has granted access to its regulatory sandbox for the first time to FinTechs experimenting with crypto assets.
- The FCA’s Feedback Statement on DLT can be found here.
- Tech start-ups are looking to form strategic alliances with established financial institutions.
- In the FinTech area, blockchain opportunities exist in financial infrastructure and transactions.
- Our firm regularly advises leading FinTech providers and industry bodies.
- Our firm has experience advising both issuers and investors in Initial Coin Offerings (ICOs).
- N26 GmbH closed a series C $160 million financing round with our firm's assistance.
- The FinTech sector is currently a major focus for various firms.
- Goldman Sachs Principal Strategic Investments group sought advice from our firm in a £13m ($17.5m) Series A funding round in Eigen Technologies Limited.
- Traditional financial institutions are increasing their FinTech investments.
[1] Source: https://www.cbinsights.com/research/blockchain-financial-services-use-cases/ [2] Source: https://www.forbes.com/sites/jasonbloomberg/2021/04/27/the-five-most-promising-blockchain-use-cases-in-financial-services/?sh=66f8f16c7d32 [3] Source: https://www.investopedia.com/terms/r/ripple.asp [4] Source: https://www.theblockcrypto.com/linked/59626/aave-compound-uniswap-decentralized-finance-defi-explained [5] Source: https://www.coindesk.com/decentralized-finance-defi-explained
- Investment in the decentralized finance (DeFi) sector, like supporting platforms such as Aave, Compound, and Uniswap, is being pursued by businesses as they see an expanding role in increasing access to financial services and growing trading volumes, showcasing the potential impact of blockchain technology on the reshaping of traditional investing and business models within the finance industry.
- In the realm of technology and finance, blockchain pioneers like Finland and Estonia are working on implementing secure, privacy-preserving digital identity management systems, which promise to revolutionize the way financial institutions verify customer identities, demonstrating the benefits of blockchain-driven innovation in promoting efficiency, security, and transparency across the industry as well as addressing regulatory concerns from bodies like the FCA.
