The cloud, blockchain and fintech created a more intuitive platform for accounting firms in serving their clients. But what are their differences? How are they revolutionizing the field?
The emergence of innovative solutions created an intuitive avenue for the digital-savvy consumers, and technology played a huge role for that. The development of blockchain, gaining prominence for cloud, and increasing involvement of fintech in the way we do accounting gave us an array of advantages that prepare us for the road ahead. However, these modern approaches often overlap with each other, and a line of distinction will help us have a better understanding of each one.
What is the Cloud?
The cloud is essentially what we call the internet.
When you say cloud-based platforms, it means storing your information online, and accessing it remotely through any device. There’s no need to use multiple software in computers—just by logging in on one account, you have a real-time overview of your numbers. Most organizations now use this technology in hosting their confidential or sensitive data, as it poses a greater deal of security, and even helps in improving business efficiency.
Cloud computing delivers online services and includes resources such as servers, databases, networking, and software, hence, taking the tedious task of crunching and processing figures in your device.
What is the difference between fintech and blockchain?
Fintech is a portmanteau of the terms finance and technology. The chatbots, roll out of artificial intelligence (AI), and machine learning are proof that fintech significantly disrupted businesses across all verticals.
Its applications in the financial services are proven to be very conducive and creative as it enhances services, processes, applications, and business models. Through fintech, there is a new financial ecosystem that hosts mobile and digital opportunities that we all benefit from today.
However, these new approaches demanded massive changes in the current regulations that somehow constrained the supposed transformation of the financial industry.
In a nutshell, blockchain is a decentralized ledger of transactions with time stamped data managed and distributed by a network of servers. All transactions would automatically be validated as they are sent to the entire network, making it hard to introduce fraud in the system. They promote freedom and ownership of currency to the population as the technology lets you manage your own wealth.
Cryptocurrencies, now considered a lucrative market, are underpinned in the blockchain. The value of crypto is now above $1.8 trillion, and is expected to rise higher in the coming years. Given its great capabilities, blockchain is expected to bring good opportunities even outside the finance arena.
Distributed Ledger Technology (DLT) or blockchain also removes the cost and tethering to third parties. Its robust, multiple layers of security and immutability appeals to the banking and financial sector today that aims to innovate their ways. Consequently, this is also why blockchain is important in the implementation of fintech. How so?
Combining the power of blockchain and fintech
Now that we have drawn their differences, how do these two work together?
Blockchain is the pillar of fintech. Simply because it augments the trust the companies need in securing their assets.
Fintech companies are financially incapable of procuring or developing high-end security systems, which blockchain can provide them on a more affordable and reliable note. Blockchain’s immutable blocks allow companies to track the entire cycle of a transaction, which cannot be modified easily.
Blockchain powering fintech proves that the transformation of the financial industry can be promising and offer us the greatest changes there can ever be in the field.
Application of information technology in accounting
From traditional banking to online banking, so much has changed in the way we manage our finances. The value-adds that appeared and improved the efficiency of processes kept the financial sector from becoming obsolete.
Think about it- the international payments, money transfers, mobile transactions- they all seem minute, but these are actually significant impacts of technology changes in accounting. If these breakthroughs continue successfully, we’re looking at a fully digital financial environment.
In one or many ways, the differences of the cloud, blockchain and fintech solutions bring together massive potentials that can bring us transparent, efficient, and secure financing. It may take a little more time for these technologies to go mainstream, but we know for sure that they will revolutionize the F&A landscape.
Learn how the developments in technology will affect the finance and accounting practice. You can get our Robotic Accounting Primer to know how the integration of blockchain, fintech and the cloud will change your business in the coming years.