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  • Tokenization and the fintech industry: understand the relationship between the two trends!

Tokenization and the fintech industry: understand the relationship between the two trends!

The fintech industry is a major beneficiary and, at the same time, one of the biggest drivers of the tokenized economy and it is not difficult to see the close relationship between financial technology companies and blockchain technology.

Fintechs are companies that offer completely digital financial services, as opposed to the traditional financial system of banks, brokers, finance companies and other institutions. In fact, we’re talking about the same services themselves, but with different approaches.

The purpose of financial startups is to meet the needs of an increasingly digitalized society and the opportunity to offer personalization and financial freedom.

The absence of physical structures and face-to-face teams greatly reduces operating costs, which makes it possible to offer services free of charge and cheaper products. To achieve this, strategies and investments must be fully supported by high technology.

How is tokenization part of the evolution of this market?

BLOCKBR, a company that develops tokenization infrastructure, will show how the relationship between fintechs and tokens will be fundamental to the financial system of the future that is starting now!

WHAT ARE THE MAIN CHARACTERISTICS OF FINTECHS

ABSOLUTE FOCUS ON CUSTOMER EXPERIENCE

As a company born and developed in the digital age, fintech strategies need to be focused on the best customer experience, to make it the most personalized and efficient through the best technological resources.

GREATER EMPHASIS ON SAFETY

Protecting the sensitive data of financial transactions is an even more critical goal for fintechs, as they need to convey security based on a 100% digital relationship, especially in Brazil, where human conversation is still part of the culture.

REDUCED OPERATING COSTS

Without the physical premises and face-to-face teams and with the complete automation of its processes, the fintech has lower operating costs and can charge better prices for its services or not charge at all – as in the case of current account maintenance fees – and increase competitiveness.

TECHNOLOGY AS THE BASIS OF BUSINESS

Technology is not an input for the operation of a fintech; it is the basis of the business and where the company’s products are developed and improved. To do this, it needs to invest heavily in technological innovations – artificial intelligence, machine learning, blockchain and others.

The digital performance of a fintech is the soul of success. Therefore, underinvesting or mistakenly investing in technology is not an option for a fintech; it can be the difference between continuing or stopping.

FINTECH SCENE AROUND THE WORLD

Investments by financial startups in the world in 2021 were 147% higher than in 2020. Brazil is 14th in the ranking of investments, which doubled in this period to reach US$ 3.8 billion. The country is a leader in the sector in Latin America.

In addition, the Finance startups are the most representative of the Brazilian technology industry in 2021, with 1,264 fintechs operating in Brazil against 1,080 retail startups and 1,013 from the marketing sector.

There are already digital banks and insurance fintechs that compete strongly with physical institutions, and some financial startups have been acquired by banks.

The basis of this success lies in offering accessible, efficient, agile and unbureaucratic services, as well as giving customers greater power over their assets. This involves creating increasingly assertive infrastructures from the point of view of data availability and security.

WHAT IS TOKENIZATION

Asset tokenization is a technological process that makes it possible to trade real and financial assets, rights, products and services and business projects through the representation of a token, an encrypted digital file.

Tokenization is an operation carried out by qualified companies, such as BLOCKBR, that master the technology and provide the tokenization infrastructure for the financial market that innovative businesses require.

Tokenization is based on a few concepts and features:

  • Blockchain technology: the large digital ecosystem with state-of-the-art processing capacity, data security and encryption, which guarantees the immutability of transaction data and data storage that prevents attacks and fraud;
  • Smart contract: digital document that controls all the business rules, from the conditions for entering and validating transactions to the triggers for investor remuneration. Without the risk of human error and delays, transparency is guaranteed;
  • Distributed data: it is not stored on a central server, but distributed among the blockchain’s computers. All transactions must be unanimously approved. As a result, the risk of fraud is zero;
  • Fragmentation of the asset: the object of the tokenization can be fragmented into hundreds or thousands of tokens, which makes it possible to make low unit prices, democratize access to small investors and obtain more liquidity and profitability.
TOKENIZATION FOR FINTECHS
Image: Canva

THE CONTRIBUTION OF TOKENIZATION TO FINTECHS

Tokenization can play a fundamental role in fintechs through numerous improvements to the availability of innovative services and products and the simplification of processes. Take a look at some of the possibilities!

PAYMENTS AND TRANSFERS

Tokenization simplifies and speeds up these processes through the security and traffic speed of all the data involved, whether from institutions or clients.

FUNDRAISING

Tokenization boosts the results of fintechs with crowdfunding projects by representing participation and rights through shares that can be of low value, increasing the base of potential investors and accelerating fundraising.

PEER-TO-PEER LOANS

Tokenizing loans allows the parties to negotiate directly, avoiding intermediation and the resulting costs. In this way, it is possible to offer credit at a better final cost, speed up negotiation, payment and the eventual transfer of the debt.

HOW TOKENIZATION BENEFITS FINTECHS

GREATER DATA AND TRANSACTION SECURITY

All the information processed in the day-to-day operations of a fintech can be converted into tokens and subjected to the high security standards of the blockchain, reducing the risk of exposure of sensitive customer and company data as much as possible.

EASIER INTEGRATIONS

Integrations of fintech systems with other financial services platforms are routine and the token will be extremely useful as it provides a layer of standardization, facilitating operation and making development and maintenance more efficient.

MORE ACCESSIBLE AND LIQUID OPERATIONS

Financial assets can be tokenized and fractionalized in such a way that their value is accessible to small investors, who are usually excluded from the investment market due to barriers to entry. Democratization allows for more profitable offers with greater liquidity.

GLOBALIZED TARGET MARKET

The blockchain works 24×365 and without geographical or time barriers. Therefore, the fintech will have a permanent target audience, further increasing business agility and expanding the brand to other regions.

TOKENIZE ASSETS WITH BLOCKBR AND BOOST YOUR RESULTS!

Tokenization is a reality in the market, with an increasing number of companies and people generating revenue with tokens. BACEN’s recent actions and the tokenized real are increasing the technology’s credibility.

For the success of your project, it is essential to have an adequate and efficient tokenization infrastructure for the financial and other markets, comprising:

  • Technical, fiscal and legal feasibility study;
  • Issuance of tokens and smart contracts with transparent governance;
  • Distribution of tokens on a simple and secure sales platform;
  • Efficient and assertive tokenization governance.

Discover BLOCKBR’s infrastructure work for regulated and unregulated markets through an All-In-One platform that offers interoperability between assets and investors.

You don’t want to see your competitor get ahead to make more money.

Or do you want to?

BLOCKBR is a fintech specialized in building infrastructure that allows a simplified migration to tokenization, meeting the needs of a highly regulated environment.

Our main mission is to develop autonomy for the capital market so that it can move, grow and potentially access digital assets. We develop legal and technological solutions that create opportunities and simplify the way in which financial services will operate, from the structuring and new roles of the agents involved to the management and supply of these assets, generating efficiency, lower costs and greater speed of liquidity.

We take care of the entire technological infrastructure for tokenization and regulation, simplifying your life so that you can take care of your customer relationship.

 

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