Blockchain in Finance: How Custom Development is Driving Transformation

Bitcoin network transactions were valued at a whopping $19 trillion in 2024. 

I guess that’s more than the GDP of most countries.  

This was just Bitcoin; when we factor in other blockchain-powered currency transactions, it would surprise you that Ethereum transactions reached $28 trillion and Stablecoin transactions totaled $27.6 trillion in 2024 - a significant total value, signaling the start of a financial revolution that would upend the global economy in the near future.

In recent times, blockchain technology has become the backbone of finance. Just like the internet revolutionized connecting, communicating, and information sharing, blockchain in finance has changed the way businesses manage their assets, deal in different currencies, sign contracts, and perform transactions.

Today, blockchain is not just another buzzword. It represents a perpetual revolution for the finance industry. Slow and centralized systems have been replaced by fast and secure decentralized systems powered by blockchain technology.

Therefore, to bridge the gap between the old centralized systems and the new blockchain-enabled decentralized systems, businesses need to leverage the power of custom software development. This helps them meet the current security demands, business rules, and regulatory compliance and stay ahead of the competition.

In this article, we will uncover everything we need to know about blockchain in finance, including some of its key applications with real-world examples. We will also discuss how custom development can help finance companies leverage the power of blockchain within their operations and processes.

So, let’s get started with the basics by knowing how blockchain is revolutionizing the financial sector and how custom software development is driving transformation in banks and Fintech companies globally.

How Blockchain is Revolutionizing the Financial Sector?

We all know what blockchain technology is. It is a decentralized peer-to-peer network that stores information across a network of computers. The key attributes of blockchain are transparency, immutability, and resistance to tampering. This means that the data stored in distributed ledgers is highly secure. The financial sector is all about money, and its biggest concern is “Security.” This is the reason why blockchain technology was first adopted by the financial industry.

Blockchain has been used in finance for more than a decade. But as the business landscape becomes more competitive and consumer demands change, it has become imperative for banks and financial institutions to adopt blockchain technology within their processes to ensure high-end security for their customers’ data and money, and accuracy in their operations.

The global blockchain market in banking, financial services, and insurance (BFSI) was valued at $277.1 million in 2018 and is projected to reach $22.46 billion by 2026, growing at a CAGR of 73.8% from 2019 to 2026.

Source: (https://www.alliedmarketresearch.com/press-release/blockchain-in-bfsi-market.html)

Below are the factors driving the growth of blockchain adoption in the financial services industry.

But how is blockchain driving this transformation? 

There are certain key components of blockchain that have brought this transformation in the financial sector. Let’s have a look at them.

Blockchain Components that are Transforming the Financial Sector

Below are the key components of Blockchain technology that are driving the transformation in the financial sector.

Distributed Ledger Technology (DLT)

Distributed Ledger Technology (DLT) is the foundational element of Blockchain that makes secure and transparent record-keeping possible. The primary function of DLT is to distribute records across a network of nodes. This leads to data immutability and tamper-proof records resulting in improved trust and accountability.

Smart Contracts

Smart Contracts are digital agreements stored in Blockchain. The terms of these agreements are written as code on a blockchain, which automatically gets decoded when predefined conditions are fulfilled. Smart contracts are used for secure asset or payment transfers without needing intermediaries. The immutable nature of Blockchain allows both parties to maintain transparency and trust while transferring assets or money online, all because of smart contracts.

Tokenization

A token is a digital representation of a real-world asset or distributed ledger in a blockchain network. Tokenization is a Blockchain attribute that refers to the process of creating a digital representation of a real-world asset or distributed ledger. It converts the ownership rights or value of a real-world asset into a digital token. The process of converting real-world assets into digital assets in a blockchain network allows investors to liquidate their assets with flexibility. Some of the real-world assets that can be converted to digital assets include stocks, bonds, real estate properties, paintings, commodities, etc.

Real-world asset tokenization has seen greater than 245-fold growth from $85 million in April 2020 to over $21 billion by April 2025.

Source: (https://assets.ctfassets.net/)

Decentralized Oracles

A decentralized oracle is a Blockchain term that is used to address a network of several nodes that are connected with each other. This decentralized oracle is used to source and verify real-world data and convert it into code. This data cannot be tampered with, making it highly secure and reliable. These decentralized oracles ensure data accuracy which are integral to data transfer within the blockchain network.

Consensus Mechanisms

In a blockchain network, it is required that all nodes agree on the validity and authenticity of the data or transaction that is recorded. Consensus mechanisms can make that happen. A consensus mechanism is a set of rules and protocols that is written in the blockchain’s code, enabling all participants and nodes to ensure the integrity and security of data and transactions. Consensus mechanisms within blockchain networks help prevent errors and malicious attacks, leading to secure data transfers and transactions. 

With the help of these components, businesses use blockchain technology in several different ways. As per the recent report, Blockchain is being highly used for supply chain audit, immutable records, and digital identity followed by smart contracts and proof-of-work.

(Source: https://www.statista.com)

Let’s go through some basic information about these blockchain use cases.

Supply Chain Audit: Blockchain offers a transparent, immutable, and shared ledger of product movements starting from manufacturing to consumer use, ensuring data safety, real-time traceability, and monitoring.

Immutable Records: Blockchain’s ability to distribute information to several nodes and then convert that information into code validated by network participants enables it to maintain immutable records that are highly secure and cannot be tampered with.

Digital Identity: Blockchain’s decentralized, immutable, and secure network enable users to store their credentials and documents that include personal information like age, degree, etc. in their digital wallets, and share them with authorized users when required in a cryptographic format.

Smart Contracts: Blockchain-powered smart contracts sign digital contracts between two parties in a highly secure manner without involving intermediaries. This helps businesses keep their information highly confidential and simultaneously reduce manual paperwork and transaction costs.

Proof-of-Work: Powered by consensus mechanisms, Proof-of-Work (PoW) ensures the security and immutability of data stored and transactions done. It allows a decentralized network to operate without an intermediary authority or a centralized system, making the entire process highly trustworthy and unfeasible to cheat.

So, these were the popular uses of blockchain in different industries around the world. Now, let’s have a look at some fundamental applications of blockchain in finance.

Fundamental Applications of Blockchain in Finance

Blockchain technology, offering a decentralized, secure, and transparent digital ledger, can fuel its proliferation in the finance industry. Below are the 10 fundamental applications of blockchain in finance that are exclusively changing the way this industry is working and progressing globally.

Smart Contracts are Automating Payments

With the help of blockchain-powered smart contracts, financial institutions and banks are now automating payments and streamlining contractual processes like loan agreements, insurance claims, and more. Using smart contracts, finance companies can now eliminate paperwork and reduce their transaction costs, leading to better productivity and profitability.

Tokenization is Redefining Asset Ownership

Tokenization enables users to convert real-world assets into digital assets and store and transfer them over a blockchain-powered decentralized network. Finance companies use tokenization to transfer ownership of financial assets like stocks, bonds, bank deposits, mutual funds, etc. Moreover, tokenization is also used by finance companies to protect their customers’ sensitive data.

Decentralized Exchanges (DEXs) Facilitate Peer-to-Peer Transactions

DEXs use blockchain technology to facilitate peer-to-peer (P2P) transactions where two parties trade cryptocurrencies with each other without involving intermediaries like brokers or banks. This enables businesses to deal with each other securely and anonymously, and simultaneously improve liquidity and reduce trading costs.

Decentralized Finance (DeFi) Mitigate Frauds & Risks

Decentralized Finance (DeFi) is powered by smart contracts that use self-executing code on a blockchain network. It is applied to automate financial transactions like lending, borrowing, and trading of cryptocurrencies and other assets. Unlike manual trading, DeFi tools apply rules relating to loan repayments, interest payouts, and collateral liquidations automatically, reducing the chances of fraud and risks.

Distributed Ledger Technology (DLT) Improves Transparency

Distributed Ledger Technology (DLT) is powered by blockchain technology, which is famous for providing an immutable record of all transactions and eliminating the need for third-party intermediaries. The data stored in the blockchain network cannot be tampered with, as each new block in a blockchain contains a hash of its own data and a hash of its previous block. This helps in improving the transparency and traceability of financial transactions.

Advanced Data Analytics Foster Smart Decision Making

Blockchain-powered advanced analytics features allow predictive analysis of the data and transactions recorded, allowing for improved visibility of the current situation and better future predictions. This can help financial companies study market conditions and make smart decisions about trading stocks and investments, resulting in higher returns.

Automated Rules-Based System Ensures Compliance

Financial organizations need to stay updated with the latest rules and regulations formed for their industry and follow them without fail; otherwise, they can face major legal problems. In that case, it becomes necessary to integrate blockchain solutions that include automated rules-based systems. Regulatory requirements embedded in blockchain systems can help financial companies stay compliant with their industry’s laws, leading to the elimination of legal costs and improved efficiency.

Cryptocurrencies & Stablecoins Enable Low-Cost Cross-Border Payments

Many businesses now are using cryptocurrencies and stablecoins like USDC, USDT, and CBDCs for instant cross-border payments. As these blockchain-powered currencies bypass exchange rates charged by intermediaries, this method of instant settlement has benefited many financial and non-financial organizations around the world. As you can track payments on the blockchain network on a real-time basis, transparency in payments becomes the cherry on the cake.

(Source: https://coinlaw.io/blockchain-in-financial-services-statistics/)

Immutability Transforms KYC Process & Identity Verification

Immutability refers to the fact that once data is recorded in a blockchain network, it cannot be manipulated or tampered with. This quality of blockchain technology has increased its use in performing KYC processes and identity verification by banks and financial institutions, as it helps prevent the opening of fraudulent accounts or fake identities. Customer identity details that include their biometrics and proof of address are stored and timestamped on the blockchain, which cannot be secretly forged.

These are the different ways finance companies and banks use blockchain. But, to unlock blockchain’s benefits to the fullest, financial businesses require custom blockchain solutions that are designed to solve their purpose and achieve their specific goals. Let’s have a look at why financial businesses need custom blockchain software development services and how custom blockchain development is driving transformation in financial services.

Why do Financial Businesses Need Custom Blockchain Development Services?

Every business's needs are different, and there is no one solution that fits all when it comes to blockchain solutions. Below are some of the most prominent benefits of applying tailor-made blockchain solutions to financial services with practical applications.

Let’s know these benefits in detail.

Unmatched Security and Privacy

The financial sector is one of the most critical industries that is prone to cyber attacks. We all know that the consequences of cyber attacks lead to huge financial losses. Therefore, all businesses dealing in one or more financial products and services consider security and privacy of their data as their prime concern. 

As blockchain technology has a decentralized and cryptographic nature, it can be used for developing financial software that makes data immutable and tamper-proof enabling businesses to protect their information from unauthorized access, fraud, and breaches. 

Compared to readymade solutions, custom blockchain applications surpass the limitations when it comes to maintaining the security and privacy of the data. By choosing customized blockchain software for your business, you can ensure that your entire project complies with all the security and privacy concerns that are meant exclusively for your business.

Michael Benoit has explained very well how custom blockchain platforms have helped reduce fraud and speed up verification in financial services.

Improved Automation and Efficiency

Finance businesses need to automate repetitive tasks like data entry and reporting so that their employees can focus on much more important tasks like decision making, planning strategies etc. Also, complying with regulations and creating clear audit trails is critical for banks and financial institutions. Therefore, improving automation and efficiency is extremely important for every financial institution.

Blockchain solutions eliminate the need for third-party intermediaries, time-consuming paperwork, and approvals from centralized authorities. This helps finance businesses to automate manual tasks and speed up their operations, reducing the chances of human errors, ensuring faster settlements.

Changes in a financial institution's working environment are inevitable because of its evolving regulatory compliance and legacy systems. In that case, off-the-shelf blockchain software can quickly become obsolete. Therefore, financial institutions and banks need custom blockchain solutions that are scalable enough to address their unique complexities and challenges.

Justifying the above narration, the founder of FreedomFolio said:

Enhanced Transparency

For finance companies, ensuring transparency while transacting and sharing data is extremely important to enable smarter decision-making for them, their customers, and their stakeholders. Maintaining integrity and stability across processes and operations is the foundational element of any financial institution or bank.

Blockchain, being based on distributed ledger technology, can enhance transparency. Every participant in the blockchain network has access to a distributed database, and each node of that distributed database requires verification by participants. Therefore, every transaction or dataset recorded on the blockchain network is visible to business owners, partners, stakeholders, customers, and whoever is involved in the process.

Customized solutions become essential when it comes to enhancing transparency in financial transactions and decision-making. A customized blockchain solution can provide highly personalized experiences to customers and stakeholders that ultimately lead to building trust and ultimately result in business success in terms of revenue generation and global expansion.

(Source: https://assets.ctfassets.net)

These benefits of blockchain custom development for finance lead to one reality, and that is - “Blockchain Custom Development is Transforming the Finance Industry.”

But, how?

Let’s have a look at some common use cases that showcase how blockchain custom development is transforming the financial sector.

Blockchain Custom Development for Finance: Common Use Cases

Unlike general readymade blockchain solutions, custom blockchain software development for finance offers advanced flexibility and control over data and transactions. Customized blockchain solutions can be developed to integrate seamlessly with existing systems, leading to enhanced performance and legal compliance. Below are some of the most prevalent use cases with real-world examples of custom blockchain solutions exclusively used in the financial industry.

Cross-Border Payments

With the help of blockchain customized solutions, banks are now able to provide real-time visibility of their transactions on a real-time basis. This transparency builds trust for banks in the minds of their customers and eliminates risks arising from disputes.

Real-World Example: Payment provider TransferGo uses a blockchain platform named RippleNet for fast and low-cost international payments. RippleNet can send payments globally, leveraging XRP to settle transactions instantly, bypassing correspondent banks and other intermediaries.

Executing Deals and Agreements

Using smart contracts feature powered by blockchain, it has become highly secure and seamless for banks, insurance companies, and financial institutions to execute deals and agreements automatically when predefined conditions are met, minimizing errors and fraud, and simultaneously reducing operational costs.

Real-World Example:  ANZ is a multinational banking and financial services company that applied blockchain-powered smart contracts to deal with Chainlink for a cross-border purchase of a tokenized asset. The transaction was agreed by both parties on a blockchain network without requiring intermediaries.

Clearances and Settlements

Using custom blockchain solutions, financial businesses can enable a shared ledger that their customers and stakeholders can access easily with high-end security. This helps respective parties to make instantaneous clearances and settlements and minimize the risk of discrepancies and fraud.

Real-World Example: The DTCC is a US-based financial market utility services provider that uses a customized DLT platform known as AxCore, enabling all parties involved to view records of transactions on a real-time basis and manage their clearance and settlements flawlessly.

Digital Assets Fractional Ownership

Tokenization breaks down a property into smaller, more affordable digital shares, making it affordable for investors to buy digital assets. Customized blockchain solutions levarging tokenization is helping investors to have a fractional ownership of digital assets. 

Real-World Example: RealT is a company that tokenizes real estate properties, enabling fractional ownership via blockchain. With the help of tokenization-powered customized solutions, allowing more people to invest in high-value real estate has become easy. 

KYC and AML

KYC (Know Your Customer) and AML (Anti-Money Laundering) hold a lot of importance in the finance industry. As these processes require high-end data security, Blockchain can play a significant role here. Blockchain-powered customized software for finance can help businesses in this sector to share verified customer information across their network, ensuring compliance with laws, eliminating fraud and false account opening, and reducing duplication in records.

Real-World Example: UAE KYC Blockchain Platform - The UAE has implemented a nationwide blockchain platform for the KYC process. Banks share verified customer data to make the KYC process systematic and secure.

Loan Syndication

Customized blockchain solutions exclusively designed for loans allow all parties to share information and collaborate using a single platform. Smart contracts feature of blockchain can help finance companies to automate distribution of funds, interest payments, and other loan related administrative activities reducing manual work, saving time, and implementing flawlessness.

Real-World Example: Versana is an independent and centralized blockchain solution that includes loan syndication servicing features. This platform transforms loan administration by facilitating all parties, including lenders, agents, and investors, to have a real-time access to accurate data and prevent delays and manual errors.

Despite the immense potential in blockchain technology, financial companies and banks face several challenges while integrating it with traditional systems. Let’s examine some of these challenges and learn how to overcome them.

Integrating Blockchain Solutions with Traditional Systems: Challenges and Solutions

The above challenges and solutions demonstrate that integrating blockchain solutions in the financial sector requires a practical and innovative approach. As blockchain progresses, it’s evident that moving from an emerging technology to mainstream use means finding the right balance between its core strengths and the real-world needs of the financial sector, like excellent user experience with high-end security.

Conclusion: The Future of Custom Blockchain Development in Finance

The future of the financial sector is inseparably tied to blockchain, and custom software development will play a significant role in shaping blockchain banking and finance companies. As financial institutions continue to embrace decentralization, automation, and transparency, tailored blockchain solutions will empower them to overcome regulatory hurdles, streamline operations, and build trust-driven ecosystems. The potential of this technology is unlimited, from secure cross-border payments to efficient KYC systems and tokenized assets.

It is an inevitable fact that ready-made solutions will no longer be enough in this competitive business world. Banks, insurers, and financial institutions will require customized blockchain solutions that help them overcome their unique challenges and compliance needs. Financial organizations that adopt blockchain technology will not only future-proof their business but also place themselves as leaders in this digitally transforming era.