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CEO and co-founder of GoldenPi
The post-pandemic economy, fuelled by changing customer behaviours and the need for greater resilience in business systems, is expected to accelerate the adoption of Web 3.0. While 2021 saw the metaverse and NFTs come into focus, this year all eyes are on the blockchain technology. Governments as well as businesses seeking to build secure, de-centralized environments for greater user engagement and empowerment, are increasingly relying on the technology to unlock scalability, in a data-safe and cost-effective manner. 
Top financial institutions across the globe have been investing aggressively in the technology. As per industry estimates, the global blockchain market is expected to grow at a rate of 46% in the next four years, with the finance industry-leading this adoption. 
Driving growth opportunities 
Blockchain is basically a distributed ledger technology that is being adopted for finance and banking solutions that translate into seamless automation, data de-centralization and user-friendliness, which can cut across digital literacy levels. Some of the key areas where the banking, financial services and insurance (BFSI) industry is fast deploying blockchain-based solutions include KYC and ID fraud protection, transaction information sharing and cross-border payments. Incidentally, market reports estimate that the technology could help banks save up to US$ 4 billion every year on operational costs vis-à-vis cross-border payments alone. 
By creating secure peer-to-peer ecosystems, currently, technologies such as Microsoft’s ION are helping financial organizations, including fintech start-ups, do away with costs involved in building robust back-end and front-end systems. Instead, the industry can choose to focus on customer engagement and product innovation, unlocking growth at both levels – new markets and customers, and greater penetration among existing customer communities. 
This is set to accelerate the next level of growth for organizations and platforms focused on providing customer experiences that are on par with an Amazon or a Flipkart. Modern-day retail investors, especially digital-first customers, expect a personalized portfolio management experience. 
While technologies such as AI and ML can help create profile-based recommendations, and updates, blockchain applications such as smart contracts can be game-changers in creating a highly transparent and personalized investment experience. Investors can log in from their phones to see if their investments are meeting pre-defined criteria, and give requisite permission to manage their funds, accordingly. Such democratization can propel fintech as well as financial inclusion to new heights. 
The Indian context
The opportunity is especially significant in a country like India, where traditional investment preferences are giving way to newer habits owing to falling interest rates on debt investments, surplus funds owing to rising incomes, and a balanced debt-equity exposure preference owing to continued global volatility. Moreover, led by its biggest demographic – millennials – India is set to witness its digital investment market to grow at a five-year CAGR of 22.4% to become a USD 14.3 billion market by 2025. 
In this context, the impact of blockchain, when deployed strategically with other Web 3.0 technologies, can create highly fluid financial investment experiences. These have the potential to engage not just urban millennials, but investors from semi-urban markets as well as senior citizens seeking greater control and convenience in an evolving investment environment beyond the fixed deposits (FDs) and recurring deposits (RDs).
The Insights Banking and Finance Service landscape reports in 2019 stated that banking and financial service organisations were targeted more often. The use of malware to target this industry has only increased since the report. It is time for BFSI to strengthen their cyber security system in order to protect the important data of millions of customers and their money they have invested. 
One of the biggest advantages that blockchain offers in an increasingly digital-first business environment is that it brings in maximum levels of data security and transparency. In fact, this is the underlying feature of the technology which, I believe, will be driving its accelerated adoption across the BFSI industry.
After spending massive budgets every year on updating legacy systems, or migrating to complex hybrid cloud systems in their quest for secure operations, financial institutions are seeing the value in blockchain. Unlike bitcoin, blockchain networks are not anonymous; they are confidential. This allows institutions complete access to transaction details without any risk of compromising user identity or transaction data manipulation. 
Going forward, a major driver for greater blockchain adoption in India will be how rapidly and successfully, governments create and revise regulatory frameworks for the technology. While we are likely to deal with quite a few roadblocks on this journey, governments across the globe are now realizing the potential offered by blockchain to transform industries and strengthen the economy. 
In India, government-related blockchain projects are estimated to drive USD 5.1 billion of GDP revenue in 2032. With programmes such as Digital India putting the spotlight on creating a digitally-empowered society and a knowledge-led economy, it is only a matter of time before businesses learn to leverage blockchain’s untapped potential to deliver next-generation products and services in personal finance.
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Views expressed above are the author’s own.
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