Transforming the current financial system through FinTech

The centralized, traditional financial system limits the unbanked and the underbanked from entering the financial markets for numerous reasons such as wealth, status, and regional jurisdiction. With the introduction of FinTech, those who have limited access can now finally experience financial services. FinTech has introduced several innovations that help most of the population gain access to different financial products and services. This number is continuously growing.

“[Financial] technology can reduce transaction costs, generate distributed trust, and empower decentralized platforms, potentially becoming a new foundation for decentralized business models. In the financial industry, this technology allows for the rise of decentralized financial services, which tend to be more decentralized, innovative, interoperable, borderless, and transparent,” says in a research paper published in the Journal of Business Venturing Insights.

For example, opening a bank account requires tedious processes, including a lump sum amount of money. For those working from paycheck to paycheck, producing such an amount can be challenging, limiting them from having a bank account. Now, DeFi innovations allow anyone to have a bank account without going through lengthy processes.

Such innovations allow users to participate in financial services by transforming the current system. Through DeFi powered by FinTech, millions of people can now access financial platforms that are only limited to wealthier classes.

 

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