What Fintech Needs to Know about Web3

September 19, 2022

Financial technology — fintech —  is by its very nature leading transformative innovation. For more than a decade now teams have been working tirelessly to evolve monolithic, often antiquated, industries into the digital era. What started as a series of upstart neobanks has matured into a $50B industry. Traditional banks have invested significantly in developing their digital transformation strategies. Droves of technology companies were born with the aim of replacing batch, paper processing to make shopping, paying, and all aspects of managing money easier for the everyday consumer.

And, almost as quickly as financial technology hit its stride, an entirely new wave of technological opportunity has entered the market — often referred to as Web3. The great news for fintech is that blockchain technology unlocks incredible opportunities. And when leaders from across the industry gather at Money2020 next month, Web3 is going to dominate the conversation.

So to prepare for those conversations and pave the way for what’s ahead, we’ll be sharing out weekly blogs that dive into the details and use cases for all aspects of blockchain for the fintech industry. Let’s start with something for everyone: three critical things fintech needs to know about Web3. 

Web3 is NOT “Cryptocurrency”

The biggest risk to fintech innovation is assuming it’s related to the volatility of cryptocurrencies and NFT-trading hyperbole and missing  out on the efficiency, security, and transparency of Web3. This transformative technology can cut out intermediaries, simplify transactions, and open doors to build stronger relationships with customers by simplifying and threading their financial lives together.

When we speak about Web3, we’re collectively referring to blockchain-as-a-ledgering system and technology that has the potential to increase the ease, efficiency, transparency, and ultimately, ownership of assets and electronic records. Blockchain is a modern, unalterable digital ledger – an update on the two-column ledgering system the Medici Bank used to revolutionize finance in the 15th century. 

The applications of blockchain in fintech are wide-ranging, but the most important ones include managing data in a way that can be easily and efficiently monitored to stop fraud and keep personal information safe; increasing the speed (and decreasing the costs) of money transfers; reducing the costs and resources required for KYC and regulatory compliance. 

This is why both visionary’s and application engineers are so excited about Web3. Blockchain is going to help us deliver on a new generation of fintech innovation — a more accessible, secure, portable and simple financial system. 

Stay tuned as we’ll dive deeper into these applications each week as we prepare for Money2020. Before we do though, the second most important thing for fintech to know about Web3 is….

Innovation needs Regulation

Innovation doesn’t have to be chaos. And when we’re talking about payments, banking, investing, or any other aspect of finances, innovation must respect the need for security and compliance. In this, regulation is good for you and for your customers. 

Didn’t think you’d hear that from the company that’s here to help you build and deploy your Web3 strategy? Well, in addition to our embeddable wallets, NFT minting engines, and data Vault APIs, Fortress offers core financial services including payments, compliance, custody and crypto liquidity via our wholly-owned financial institution, Fortress Trust. Having a chartered, regulated entity in the foundation ensures privacy, compliance and business continuity (hear more from Fortress Trust CEO, Albert Forkner, on-stage at the event).

And this isn’t simply happening here in the walls of Fortress and Fortress Trust – there are global initiatives underway to drive regulation across this new industry, that we’ll continue to translate and disseminate for our partners. As you build your Web3 strategies, make sure you’re partnering with both technologists and former bank regulators who take your business’s (and customers’) security seriously.

And speaking of those Web3 technologists, the third “thing” to know…

You don’t have to be a Blockchain expert to benefit from Web3

The reality is that we’re in the ‘early days’ of Web3, and the good news is you don’t have to be an engineer or master of the tech to unlock the benefits of it. 

The majority of us attending Money2020 remember a lot of time before the ubiquitous internet, so we’ve already learned (and relearned) Web1 and Web2. We know how to enable account access via mobile apps and websites, layering tech on top of batch processing to give consumers faster access to their funds. The value of migrating a core system from legacy standalone servers to cloud-based. How to condense decades of payment innovation into a simple click to checkout. And now blockchain presents new opportunities.

And the fastest way to get up and running is to leverage the on-ramps that Fortress has built, and update your existing tech with blockchain-enabled services to take your business to a whole new level. 

Fortress is here to make launching and managing your blockchain-enabled applications as seamless as possible, with simple, streamlined APIs that power businesses at any stage of Web3 adoption. Let’s meet up and discuss all the ways we can help – quickly build and embed digital wallets; mint NFTs; and integrate key financial services. Just email Zack Fleischer to set up a meeting at Money2020.

See you in Vegas!

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