The adoption of smart contracts is still underway, and by now, it is clear that this technology will radically reshape the future of finance.
A smart contract is a code that enforces the completion of an agreement in a digital way without any paperwork or input from third parties. The simple idea behind this technology has become a cornerstone for a number of digital financial services. To fully have smart contracts explained, let’s take a look at some of the top smart contract examples in fintech.
Recording financial data
Banks and other financial organizations are using smart contract solutions to record financial information, facilitate auditing and transmit data across organizations. For example, Barclays Financial Bank is using a smart contract approach to record changes in ownership and automatically transfer funds.
See also: A Push to Make Smart Contracts Even Smarter
Investment banking
In syndicated business loans, corporate clients benefit from shorter loan settlement cycles, reduced from 20 days to 6 days or less. This boosts the demand for business loans and will subsequently help lenders generate more income. Smart contracts also help to reduce operational costs for investors.
Digital mortgages
In the digital mortgage industry, smart contracts help to accelerate loan application processing reducing the loan settlement time to 5-6 days. The technology also helps to lower operational expenses and generate greater income. Apart from mortgages, the uses of smart contracts extend to include education, vehicle, and student loans.
Insurance
In the car insurance sector, the combination of smart contracts and IoT can streamline and accelerate the process of insurance underwriting. While IoT sensors collect data about the driving behaviors of all drivers involved in the accident, the smart contract platform automatically assigns insurance using policy data stored in the blockchain.
Digital identity
Identity theft is one of the major issues in today’s world. Smart contracts, though, are giving individuals complete control over the data that they choose to disclose to any middlemen or providers of goods and services. Organizations, on the other hand, may rest assured that the data recorded in the ledger represents a particular trusted customer.
Recurring payment transfers
In SaaS and B2B sectors, a smart contract can be used to enable the execution of secure transactions as soon as a certain action, event, or condition is completed. For example, when the goods or services are delivered, the payment is automatically charged and transferred.
Cryptocurrency trading
In cryptocurrency trading, smart contracts enable fast currency exchange and help eliminate trading barriers. Crypto smart contracts are now the main driving force behind digital currency development. Advanced smart contract capabilities play a decisive role in how quickly the currency gets support and proliferation.
Recent research by Analytics Insight names Avalanche as a rising star on the digital trading scene. Although any blockchain could issue and store smart contracts, so far, this currency boasts the fastest smart contracts platform in history. Low transaction fees are also making it extremely attractive.
The adoption of smart contracts is still underway, and by now, it is clear that this technology will radically reshape the future of finance.
However, the business opportunities that come with the blockchain are not solely limited to fintech.
