In recent years, technological advances are imminent. In some industries, especially traditional ones, new technologies are growing at an unstoppable and unpredictable pace. They improve our quality of life and provide businesses and individuals with a faster, safer and more transparent business.
One of the most promising technologies in the world is blockchain, or “blockchain”. An open and decentralized registry of transactions conducted using cryptography. It is essentially an undisturbed ledger connected by nodes.
Blockchain is destined to be the next technology in the financial industry. Current applications outperform cryptocurrencies. It can automate existing processes, simplify complex operations, and improve financial services and tools such as loans and credit.
This article is about how blockchain can revolutionize the lending industry. It will explain how to use it, what its advantages are, and reflect on how open the company is to the technology.
Blockchain in the lending industry, a viable option?
A loan is a financing tool granted to companies and individuals who need to leverage their operations, projects and obligations. Loans are your solution for financing your business expansion, dream home purchase, business creation or business transformation.
Blockchain is a technology under test that could significantly improve the original lending formula. The goals of blockchain are to digitize processes, say goodbye to meetings, book frustrations, exchange emails, lack of communication, messages between parties and departments, and more.
Lending running on the blockchain is faster, safer and more transparent. This is due to the nature of blockchain that can be applied to automate credit operations at the financial level.
The time reduction is noticeable. Loans that take a few days to get approved appear to be “ready-to-be” in a shorter period of time. For example, BBVA, a pioneer in the application of blockchain in the financial sector, reported on bank lending, the digitalization of the process has reduced the original 25 days of paperwork, review and preparation of documents to just two days.
Additionally, you may not use this technology to correct any information. It’s completely transparent. These terms are kept in a public registry and are valid anywhere in the world.
Finally, it is worth mentioning cost savings because we are managing a single chain instead of multiple systems managing millions of transactions.
A revolution that takes time but is coming
It will take time for the lending industry to adopt blockchain, but it will come. That’s for sure. Banks and companies will eventually adopt this technology into their systems. It is still environmentally friendly and has to mature in various aspects such as regulation and standardization, but it will become commonplace in the industry.
Large enterprises are already taking advantage of blockchain opportunities. Its adoption is increasing. It is logical that decentralized, secure and transparent loans are of great value.
Savings, bank cancellations, and the use of other currencies (such as cryptocurrency loans) are all attractive.
Many companies are innovating and abandoning the traditional models of the past. They hope to simplify their financing methods, offer online services and expand their loan portfolio. In fact, even microloans are already an option because they are faster, require less, and contain less money. Great for those who want blockchain or instant leverage.
Another example of a blockchain revolution in the lending industry is AAVE. DeFi protocol decentralized finance was launched in 2017 and the project connects individuals and pledges with secure and instant funding online.
AAVE under the name “Flash Loan” focuses on cryptocurrency lending and disruptive initiatives in blockchain. This plan is popular due to its simple proposal, seamless interface, stable system, and access to current new currencies (e.g. Bitcoin).
Source of information: Edited by TECNOLOGIA with 0x information. The copyright belongs to the author, and any unauthorized reproduction is prohibited.