Blockchain: The Hottest Disruptor In Fintech

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FinTech is a young industry rife with new and disruptive technologies. However, few are more widely discussed than blockchain, the technology behind cryptocurrencies like Bitcoin.

After existing for little more than half a decade, blockchain is already expanding across the financial services sector. What is it, and what can we expect to see in the coming years?

What is Blockchain?

Imagine the blockchain as a digital ledger which can be used to record transactions involving the exchange of anything which possesses value. Now, picture that same information being constantly shared between many different users, and continually updated to reflect new transactions.

In many ways, blockchain technology is like Google Sheets—the blockchain is basically a ledger hosted from countless different computers at the same, and which can be accessed and verified at any time from any computer running the bitcoin software. Each transaction is recorded in a shared spreadsheet, allowing transactions to be verified against the record at any time.

Broader Blockchain Adoption in Financial Services Industry


The blockchain records every transaction that has ever happened involving that currency. However, because the database is distributed across thousands of different computers, it has no one single point of failure, meaning that even if one or multiple computers fail, the data will still be hosted and updated elsewhere.

This reputation as a safer and more error-proof method of tracking transactions has piqued not only the interest of tech-savvy consumers, but financial institutions as well. In fact, a several major banks began considering blockchain technology recently, including Citigroup and J.P Morgan Chase.

With broader application of this technology, banks could potentially save as much as $20 billion each year by 2022.

Using Blockchain to Fight Fraud Losses

Banks, financial services, and even merchants are now adopting blockchain technology to reduce costs in several different regards, including as a tool for minimizing loss.

At the end of 2015, Nasdaq introduced their own proprietary blockchain-powered technology, Linq. With the blockchain’s simplified payment process, there is less room for error; not only that, but the process reduces administrative burden, saving additional time and money while also preventing fraud. Although they conduct business in a much different manner, the same is true for merchants regarding simplifying costs and reducing chargeback instances.

Unlike credit and debit transactions which can be reversed via the chargeback process, Bitcoin transactions are non-reversible. This eliminates merchants’ risk of friendly fraud, which unfortunately represents the bulk of chargebacks filed by customers.

Blockchain is Not Risk-Free

However, it’s important to note that, while blockchain can help prevent fraud and excessive overhead costs, it’s still not invulnerable to loss.

Back in August, hackers invaded cryptocurrency exchange Bitfinex, making off with roughly $68 million in Bitcoin. The company has since announced plans to compensate customers by issuing Bitfinex tokens, though details of the plan are still in discussion.

Ultimately, this and other hacks over the last few years demonstrate that, while blockchain technology may be helpful in preventing fraud in certain regards, it is far from foolproof.

What Comes Next?

While blockchain technology grew tremendously in just a few short years, it remains a relatively niche idea. In terms of a timeframe, it will still be the better part of the next decade before blockchain technology is cemented in place as a fixture in the financial services industry.

One of the primary concerns going forward will be in trying to further ensure the platform’s security. If the same vulnerabilities are still present in the blockchain system which allowed for the Bitfinex hack remain present, blockchain skeptics will continue to steer clear of the platform. Even if it is no less secure than any other FinTech innovation, and in many ways, is actually much safer, the fact that blockchain transactions are not meant to be overturned can work toward the platform’s disadvantage.

Besides security and liability for criminal activity, another obstacle which may impede the more widespread acceptance of blockchain is a lack of standardization. At its essence, blockchain is less of a cohesive technology and more of a concept describing a method of tracking transactions. As such, there is still a lot which will need to be done to establish standards and practices before blockchain can become a major force in financial services.

Blockchain is Still Young

In truth, blockchain is still a very young technology, being introduced to the world less than a decade ago. In that time, it’s made a considerable impact on financial services, and is staged to become a major disruptive force in FinTech going forward.

I expect we will hear a great deal more about blockchain in the coming years. However, its widespread application is still a few years down the road, which could give us the time we need to figure out just what we can do with this technology.

Article by Monica Eaton-Cardone

About the Author:

Monica Eaton-Cardonemonica is an entrepreneur and business leader with expertise in technology, e-commerce, risk relativity and payment-processing solutions. She has co-founded several successful companies, which globally comprise 350-plus employees. With the advent of “friendly fraud” expanding from the US to other countries, Eaton-Cardone recognized the necessity to protect the global economy from illicit chargeback threats, hence Global Risk Technologies (GRT) was established. She currently serves as the CIO of GRT, as well as its US subsidiaries , Chargebacks911, and eConsumerServices. She also serves as the COO of Chargebacks911. Eaton-Cardone has earned a reputation for creative business solutions, helping merchants and banks to achieve sustainable payment-processing practices and supporting consumers in resolving transaction issues. She is a champion of women in IT, and hopes to contribute to an expanded presence of females in technical professions and leadership roles.


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