FinTech vs Traditional Financial Services Sector: a Decentralized and Sustainable Future
The traditional financial services industry is increasingly threatened by the emergence of the FinTech sector in recent years.
Numerous factors are to be considered but this article’s focus is on the adaptability and vast application of technological advancements in reinventing the industry, especially those that incorporate sustainability.
Traditional Financial Services Sector
The traditional sector heavily focused on providing intermediary services to consumers. However, since the 2008 financial crisis, trust towards banks has been negatively affected. Additionally, traditional players have been late to adopt data-driven approaches and technological trends such as Big Data, Artificial Intelligence, and Blockchain.
These factors have led to the emergence of fintech startups and new business models, offering what traditional banking services cannot.
Fintech enterprises have focused on customer-oriented solutions, revolutionizing the financial sector. New enterprises focus on solving customer pain points, by offering innovative and effective solutions through the removal of middlemen, such as banks. One such solution is the use of Blockchain and Distributed Ledger Technology (DLT), eliminating the need for intermediaries, as all parties have access to the same ledger.
Blockchain & Applications
Blockchain Technology, in particular, has been a key factor in the trend towards a more decentralized industry. With the use of DLT, exchanges between parties are recorded, facilitating audit and data management of assets.
Apart from the famous applications of blockchain in the development of cryptocurrencies such as Bitcoin, other applications may include Smart Contracts. These refer to contracts that are encrypted into the blockchain, and are self-executing and self-maintaining, increasing transparency between involved parties.
Furthermore, it’s not only individuals who are benefiting from decentralized applications. Business clients have also been under great focus as Fintech businesses, such as R3 Corda, have been able to offer open-source software solutions, strengthening operational capabilities and adding value for their clients.
Power Consumption Problem
These are just a few of the applications already in place, and there is tremendous potential for further developments. However, the rapid adoption of emerging technologies sectors like AI, IoT, Serverless Computing, and Blockchain is resulting in the simultaneous rise in the power consumption demand for the operations of those technologies.
The Bitcoin Network, for example, is estimated to consume at least 75.9 Terawatts of electricity per year currently, and potentially more than double in the future, even surpassing the annual consumption of individual countries such as Switzerland and Greece (Source: Digiconomist). Additionally, the annual energy consumption of global Bitcoin mining electricity costs is calculated above $4B annually.
A trend observed, therefore, is the rise of enterprises that aim to minimize negative environmental impact. They offer eco-friendly solutions with innovative and sustainable business models to mitigate blockchain’s energy consumption problem. Three pain points they address include reducing carbon footprint, minimizing energy losses, and increasing renewable and clean energy usage.
One such company that combines sustainability with access to an ecosystem where users have access to the new distributed economy, blockchain, and its benefits in a risk-averse manner, is GX Blocks Energy S.A. and its hybrid class of products and services.
GX Blocks facilities, backed by renewable energy sources, minimize carbon emissions and maximize energy efficiency with liquid cooling technology, ensuring that the renewable energy produced is efficiently used by avoiding any energy loss and wastage.
The GX Blocks sustainable business model is based on three pillars:
- Autonomous Renewable Energy Sources: For True Scalability
- Tank Immersion & Liquid Cooling Mining: Using Liquid Cooling Methods for Sustainability & Efficiency
- All-in-One Blockchain Platform: A Simple & Secure way to Access Blockchain Applications
The future of FinTech has unimaginable potential, especially in the direction of Decentralization and Sustainability. Growth-oriented companies such as GX Blocks Energy have great opportunities lying ahead and massive potential to transform the FinTech industry.
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