Mapping Blockchain Applications in FinTech: A Systematic Review of Eleven Key Domains

Abstract

Blockchain technology is now a useful tool that FinTech organizations use to increase transparency, optimize activities, and seize new possibilities. This research explores blockchain applications within the FinTech sector. This study systematically explores blockchain applications within the FinTech sector by 164 peer-reviewed articles, utilizing the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework. The review identifies eleven applications, such as smart contracts, financial inclusion, crowdfunding, digital identity, trade finance, regulatory compliance, insurance, asset management, investment, banking, and lending. A mixed-method strategy, combining quantitative and qualitative content analysis, was applied to examine the adoption and impact of blockchain across these subdomains. It further discusses current challenges such as regulatory ambiguity, interoperability limitations, and cybersecurity threats. This paper provides a consolidated framework of blockchain’s actual application in FinTech subdomains and identifies the main gaps in the existing literature. These results have practical implications for practitioners, researchers, and policymakers who seek to harness blockchain for achieving financial innovation and inclusive growth.

1. Introduction

Blockchain provides a decentralized framework that enables users to modify the blockchain network. Blockchain networks are free from the influence of financial institutions. Data can be recorded on blockchains, and the digital ledger framework enables the dissemination of information. This can be employed to convey information directly to network users. Blockchain offers an encrypted platform for executing transactions [1]. The robust security mechanism of blockchain technology makes it appealing to a diverse range of businesses. The accounting functions of each company are now executed independently, necessitating time and personnel for the data reconciliation process. The implementation of blockchain technology offers a solution to this problem by facilitating the immediate documentation of transactional, contractual, and additional information within a communal ledger [2,3,4]. This indicates that there will be an automatic process for verifying legal compliance. The organization’s operations will see a notable improvement in effectiveness. The enhancement of the consumer experience could lead to more secure data transactions and identities [5,6,7,8,9]. The core principle of blockchain is a decentralized record system that meticulously documents every transaction, guaranteeing the authenticity and sequential arrangement of that information within a safe, tamper-proof worldwide network system [10].

With this blockchain technology, we can keep the digital revolution on track while also protecting user data and privacy. Both data management and the need to maintain secrecy might see an uptick [11]. Accurate and up-to-date accounting records between counterparties facilitate a more transparent and expedited audit procedure. Instead of going over a large number of mundane transactions, auditors may be concentrating on controversial and difficult issues [12]. As a consequence, process automation did not lead to the loss of jobs for accountants or auditors. Blockchain and artificial intelligence are very separate technologies that have vastly different uses [13,14,15,16]. Conversely, artificial intelligence operates as a centralized system reliant on encrypted data that remains unreadable and uncopiable. The collaboration presents numerous advantages, especially regarding financial support [17]. In the context of order-to-cash, record-to-report, and procure-to-pay processes, blockchain technology eliminates the need for traditional record-keeping by enabling seamless communication among all stakeholders involved [18].

Blockchain-enabled smart contracts facilitate the creation of legally enforceable financial agreements among all parties, which will be executed with assurance upon fulfillment of all conditions [19,20]. Similar to conventional contracts, smart contracts implement conditions in real-time and without ambiguity on a blockchain, eliminating intermediaries and enhancing accountability for all participants in ways that traditional contracts cannot [6,21]. A decentralized network of computers performs intermediate functions over the internet, eliminating the need for a trustworthy third party in the distributed ledger system [22]. Every transaction is meticulously documented in a digital ledger, which is disseminated among all participants in the network and made available to the public for transparency. The network ensures asset ownership and facilitates transparent transactions, as every member possesses a valid copy of the ledger. This structure provides a more secure mechanism compared to the traditional central ledger approach [23].

Digital technology has opened up new avenues for enhanced collaboration. Cloud-based applications have transformed financial accounting practices and procedures, incorporating analytics tailored for specific use cases like accounts payable and receivable, contract management, reporting, and many more [24]. Cash, cashier’s checks, and wire transfers represent the most secure methods of payment. However, it is not possible to track wire transfers, which require time and cash. Transactions conducted through blockchain technology eliminate these issues and enhance customer trust [25,26]. Advancements in technology enable immediate cash transfers among financial institutions, reducing friction and accelerating the settlement process [1]. This technology presents opportunities for computerization and is well-suited for monitoring transactions. Financial service providers have the capability to utilize smart contracts for the oversight of buyer’s dues and seller’s deliverables. This article explores blockchain technology, its characteristics and applications, examining its necessity and key applications within financial services [27].

Blockchain technology has the potential to facilitate the advancement of capital markets. Conventional trade financing methods have consistently posed challenges for companies, as the lengthy procedures often hinder operations and complicate liquidity management [28]. Blockchain has the potential to facilitate cross-border operations and enhance the efficiency of financial transactions. This enables business transactions to occur securely across regional or geographic boundaries [29,30,31]. Blockchain is especially adept at real-time tracking of commodities as they transit and change ownership across the supply chain, owing to its immutable record. Utilizing blockchain technology provides enterprises with diverse opportunities and solutions [8,32]. In a supply chain, events like the allocation of incoming items to various shipping containers can be organized through entries recorded on a blockchain. A new and adaptable approach to organizing and using tracking data is offered through blockchain technology.

The rapid evolution of blockchain technology has sparked significant interest in its transformative potential within the FinTech sector. Traditional financial systems are increasingly challenged by inefficiencies, high operational costs, and security vulnerabilities. Blockchain’s decentralized, transparent, and tamper-proof architecture offers an innovative solution to these longstanding problems. Motivated by the growing market demand and the critical need to modernize financial infrastructures, this review seeks to systematically analyze how blockchain applications can enhance efficiency, trust, and inclusivity across various financial services, from payments and lending to compliance and asset management. Previous empirical studies have examined the factors influencing blockchain adoption in the banking sector [33,34,35,36,37], including several review-based papers that synthesize existing findings and highlight thematic trends [38,39,40,41]. Hence, the main objectives of this study are as follows:

I

What are the main blockchain applications in the FinTech sector?

II

How are these applications used in FinTech fields?

III

What are the potential challenges and limitations of blockchain in FinTech?

This paper makes several key contributions. First, it consolidates the fragmented literature on blockchain applications in FinTech, identifying ten major fields of application such as banking, lending, smart contracts, and regulatory compliance. Second, it systematically examines the practical advantages, challenges, and limitations of blockchain adoption, highlighting issues like scalability, legal enforceability, and cybersecurity. Third, it employs the PRISMA framework to ensure methodological rigor and transparency in the literature selection. Finally, this paper offers strategic insights for policymakers, practitioners, and researchers aiming to leverage blockchain for innovation and inclusive financial growth.

This paper begins with an introduction that discusses the foundations of blockchain technology and its potential to transform financial services. It then details the Materials and Methods, explaining the use of the PRISMA framework for systematic literature selection. The next sections explore the working procedure of blockchain, including key technical processes like authentication, authorization, proof of work, and mining. The core analysis identifies and discusses eleven major applications of blockchain in FinTech, covering banking, payments, lending, wealth management, compliance, and more. Following this, this paper critically analyzes the challenges and limitations, such as energy consumption and interoperability. This review concludes by summarizing key findings, discussing implications, and suggesting avenues for future research and practical development.

2. Materials and Methods

This review systematically examined the application of blockchain technology in the FinTech sector by adopting the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework, which ensured transparency and methodological rigor throughout the literature selection and analysis. A mixed-method strategy, combining quantitative and qualitative content analysis, was applied to peer-reviewed journal articles, conference papers, and international reports addressing blockchain adoption in FinTech. To identify relevant studies, a comprehensive search was conducted in leading academic databases, including Scopus, Web of Science, and Google Scholar, complemented by specialized sources. The search strategy employed carefully selected keywords such as “blockchain in FinTech,” “distributed ledger technology in banking,” “smart contracts in finance,” and “blockchain-based financial inclusion,” derived from prior systematic reviews on blockchain [42,43]. These keywords were refined iteratively to capture both broad and domain-specific literature. The initial retrieval yielded 456 articles published between 2016 and 2024. During the screening stage, a total of 152 articles were excluded, including 59 duplicates and 93 irrelevant articles (not focused on blockchain in financial technologies), leaving 304 articles. A full-text eligibility assessment followed, applying inclusion criteria such as relevance to blockchain adoption in FinTech, clarity of conceptual or empirical framework, coverage of technological and regulatory dimensions, and analytical depth. Exclusion criteria included insufficient methodological rigor, lack of empirical or theoretical contribution, or a focus on non-financial applications of blockchain. At this stage, 140 articles were excluded. These criteria were aligned with prior systematic reviews in financial innovation and blockchain studies [43,44]. Quality appraisal of the remaining studies was undertaken by evaluating peer-review status, citation impact, methodological soundness, and clarity of findings, consistent with established guidelines for systematic reviews. Ultimately, 164 eligible studies were retained for qualitative synthesis, forming the analytical basis for evaluating blockchain’s transformative role in FinTech. After finalizing the set of 164 eligible studies, a structured topic categorization was undertaken to identify the major research themes. Initially, a qualitative thematic coding approach was applied, where studies were manually reviewed to group them into conceptual categories based on their objectives, methodologies, and findings. To strengthen the reliability of this process, topic discovery techniques were also considered. Specifically, Latent Dirichlet Allocation (LDA) was employed to detect underlying semantic clusters across article abstracts and keywords, allowing for the triangulation of manually coded themes with machine-driven topic models [45]. This combined approach ensured that the extracted studies were systematically divided into coherent topics, reducing subjective bias and enhancing the transparency of the synthesis process. The final thematic structure encompassed domains such as blockchain applications in payments and settlements, digital identity and security, regulatory and governance issues, financial inclusion, and smart contracts in banking and FinTech ecosystems. In sum, the categorization of blockchain applications into ten themes was performed through a systematic process combining inductive coding and reference to prior frameworks. First, the abstracts and full texts of the 164 eligible studies were reviewed to extract descriptions of blockchain use cases in FinTech. Using qualitative content analysis, studies were coded according to recurring patterns in application areas such as payments, settlements, regulatory compliance, and digital identity. These codes were iteratively refined until ten distinct thematic clusters emerged. To enhance reliability, the inductive categorization was triangulated with topic modeling using Latent Dirichlet Allocation [45], which helped confirm the semantic coherence of the themes. While prior works [43,44] provided broad categories of blockchain adoption, the final grouping in this study was primarily data-driven. Accordingly, this study identified ten major types of applications of blockchain in the FinTech sector, encompassing payments and remittances, digital identity and KYC, regulatory compliance, financial inclusion, smart contracts, asset tokenization, capital markets, insurance and risk management, trade finance, and decentralized finance (DeFi). The PRISMA flow diagram (Figure 1) illustrates each stage of this selection process.

3. Blockchain Working Procedure

A blockchain represents a digital framework for data storage. As data arrives in blocks, those blocks can be referred to as units of information. When these blocks are joined together, they transform into permanent data units. This indicates that once the squares are joined, the information remains largely unaltered [46]. This technology represents a notable advancement, allowing individuals to keep track of a wide range of assets, including financial accounts, funds, assets, identities, medical records, and more. Individuals can rely on this innovation since they need not worry about anyone tampering with those records. For example, if individuals acquire a property and maintain its legal records on a blockchain, they can typically provide evidence that this property rightfully belongs to them [47]. There is little incentive for anyone to alter or tamper with the record stored on a blockchain. This is why blockchain represents a forward-thinking advancement that enables people to safely store data. Currently, it is essential to understand the operational mechanisms of blockchain within the banking sector.

Each transaction on a blockchain undergoes a series of essential steps before it can be finalized. When a transaction occurs on the blockchain that necessitates verification, a block containing the transaction details is generated [48]. The generated block is subsequently distributed to each node or respondent within the blockchain network. Subsequently, the nodes proceed to verify the transaction. If the details of the recently created node are incorrect or modified, it will fail to align with the other blocks within the blockchain. In that case, the validation process will not succeed, resulting in the transaction remaining unrecorded [49]. Upon successful verification, the transaction is deemed finished. The modifications will be disseminated across each node within the specified blockchain network. The block is subsequently added to the blockchain. In the proof-of-work mechanism, nodes are incentivized with rewards, typically in the form of cryptocurrency [23,50].

3.1. Authentication

The initial design of blockchain aimed to function independently without a central authority. At this time, it is essential that exchanges undergo verification. This validation is completed through the use of cryptographic keys. Cryptographic keys consist of a pair: the private key and the public key. Each client possesses a unique private key alongside a public key that is accessible to all. When these two keys are used, they create a secure digital identity to authenticate the user through digital signatures and to facilitate the transactions they need to execute [51].

3.2. Authorization

Once the users have reached an agreement on the transaction, it must receive approval before being incorporated into a block in the chain. The decision to incorporate an exchange into a public blockchain is reached through consensus. The framework of protocols that governs how a blockchain network operates and validates the information within the blocks is referred to as a “consensus”. The exchange must be regarded as significant by the majority of the hubs or PCs within the organization prior to its inclusion in the blockchain [52].

4. Importance of Blockchain Technology

The worldwide financial system delivers essential services to billions of individuals each day, all while overseeing trillions in cash flow. These ambitious objectives present numerous challenges that the finance industry has been navigating for an extended period. These challenges encompass the costs associated with multiple stakeholders, delays, increased documentation, and data breaches, leading to significant losses that the organization faces annually [22,53,54]. Blockchain technology holds the promise of tackling the issues facing the global financial industry at present. Furthermore, the expenses associated with the current stock market are elevated due to the involvement of entities such as regulators, brokers, and the stock exchange. Utilizing a decentralized management approach for stock exchanges can enhance system effectiveness [55]. External regulators are unnecessary, as blockchain technology enables the creation of smart contracts. Equity markets are heading for decentralization as a consequence. Blockchain technology enables secure and direct interactions between investors and companies, effectively reducing costs by eliminating intermediaries [56].

The financial industry has faced numerous challenges for an extended period. A multitude of challenges have been addressed thanks to significant technological progress; however, certain innovations have also introduced new complications. The abundance of FinTech options available today presents a significant challenge for financial service providers in selecting the most suitable choice for their needs [57]. Consequently, they seek a holistic approach capable of addressing all these severe problems. The application of blockchain in financial services is intriguing and holds the promise of tackling significant business challenges [58]. As a result of centralization, the financial sector is required to allocate a significant amount of capital across various enterprises. Financial service providers are required to allocate resources towards accounting, maintaining databases, acquiring central databases, implementing value transfer systems, ensuring database security, covering labor costs, and paying commissions to intermediaries. Financial service providers must consistently allocate budgets for each of these assets, as they are all recurring in nature. The costs associated with a financial service system can escalate significantly due to various supplementary expenses [59].

The global blockchain technology market demonstrated remarkable growth in 2022 with a revenue of USD 10,015.2 million (refer to Figure 2). It is projected to expand exponentially to USD 1,431,535.5 million by 2030 with an estimated compound annual growth rate (CAGR) of 87.7% during 2023–2030. This expected expansion is a result of increased adoption of blockchain solutions across sectors in search of enhanced security, transparency, and efficiency. In the market, the public cloud segment was the most significant one, with a revenue of USD 10,704.8 million in 2022 and set to achieve the highest growth rate during the forecast period. This points towards the need for scalable and flexible blockchain deployments using public cloud platforms. Regionally, North America led the market as far as revenue was concerned in 2022, facilitated by state-of-the-art technological infrastructure and regulation-friendly policies. Meanwhile, India is likely to have the highest CAGR during 2023–2030, reflecting emerging markets’ interest and government initiatives in adopting blockchain technology. Historical data for 2017–2021 is utilized in the market analysis, with 2022 as the base year for estimation and a forecast period running out to 2030. Segmentation is performed across public, private, and hybrid cloud models, reflecting the diverse deployment preferences impacting the blockchain landscape. On the whole, the evidence points to blockchain’s groundbreaking potential towards transforming digital infrastructure and business processes globally [60].

5. Blockchain Application in FinTech

This study found ten major applications of blockchain in the FinTech sector. They are banking and payments, lending and credit, smart contracts and automation, financial inclusion and micropayments, crowdfunding and alternative financing, digital identity and fraud prevention, trade finance and supply chain finance, regulatory technology and compliance, insurance and risk management, stock trading and asset management, and investment and wealth management. Under these major applications, there are also several sub-applications that will help us to examine the second research question. And they are discussed one by one within the exploitation of them in the FinTech sectors.

Table 1. Summary of blockchain applications and their subdomains.

Application Area	Subdomains
Banking and Payments	Cross-border transactions, central bank digital currencies (CBDCs), decentralized payment networks, stablecoins, and blockchain-based payroll systems.
Lending and Credit	Automated loan underwriting, blockchain-based credit scoring, and peer-to-peer (P2P) lending platforms.
Investment and Wealth Management	Decentralized autonomous organizations (DAOs), blockchain robo-advisors, fractional ownership, decentralized hedge funds and tokenized securities.
Financial Inclusion and Micropayments	Blockchain micropayments, microlending to unbanked, and cross-border mobile money systems.
Crowdfunding and Alternative Financing	Security token offerings (STOs), initial coin offerings (ICOs), and blockchain-based crowd-sourced investment platforms.
Digital Identity and Fraud Prevention	Blockchain-based digital identity, decentralized identity authentication, and cybersecurity.
Trade Finance and Supply Chain Finance	Blockchain-enabled trade settlement, supply chain finance, and real-time tracking of assets.
Regulatory Technology and Compliance	AML/KYC systems, real-time auditing, automated tax filing, compliance automation.
Insurance and Risk Management	Blockchain-insured policies, parametric insurance, and trade credit insurance.
Stock Trading and Asset Management	Automated market makers (AMMs) for trading, decentralized derivatives, and stock exchanges on blockchain.
Smart Contracts and Automation	Automated smart contract escrow services, financial data sharing, and automatic loan repayment.

shows the summary of blockchain applications in different subdomains.

5.1. Blockchain Applications in Banking and Payments

Table 2. Description of blockchain applications in banking and payments.

Applications	Definition	Description
Cross-border transactions and remittances	Cross-border transactions involve the transfer of money, goods, or services between individuals or businesses located in different countries. Remittances are a type of cross-border transaction where people, usually migrant workers, send money back to their home country to support family or relatives. Both play a key role in global trade and economic support, especially for developing nations.	Blockchain technology is revolutionizing cross-border transactions and remittances by making them more affordable, faster, and transparent. By using decentralized networks, blockchain eliminates the need for traditional intermediaries, which significantly lowers costs and speeds up transaction times [1,2,3,4,5,61]. Companies like Ripple and Stellar are at the forefront of this transformation, offering real-time, low-cost transfers that make sending money across borders easier and more efficient [10,11,12]. Furthermore, the introduction of stablecoins and central bank digital currencies (CBDCs) has added an extra layer of stability and security to these transactions, making cross-border payments more reliable and accessible. Despite these advancements, challenges such as regulatory hurdles and cybersecurity risks still need to be addressed before blockchain-based cross-border payments can be adopted on a global scale [13,17,18,19,61,62,63].
Central bank digital currencies (CBDCs)	Central bank digital currencies (CBDCs) are digital forms of a country’s official currency issued and regulated by the central bank. Unlike cryptocurrencies, CBDCs are centralized, legal tender backed by the government, aiming to provide a secure, efficient, and low-cost alternative to cash. They can be used for everyday transactions, help improve payment systems, and promote financial inclusion while maintaining monetary stability.	Central bank digital currencies (CBDCs) are digital versions of a country’s official currency, issued and regulated by central banks. They are designed to improve payment efficiency, promote financial inclusion, and enhance the effectiveness of monetary policies [13,17,18,19]. Unlike cryptocurrencies, which are decentralized, CBDCs are government-backed, ensuring they are stable and subject to regulatory oversight. Countries like China with its Digital Yuan and the European Union with the Digital Euro are leading the way in CBDC development, aiming to modernize their financial systems and reduce dependence on physical cash [6,20,21,22]. However, there are still significant challenges to overcome, such as concerns around cybersecurity, privacy, and the potential disruption of traditional commercial banking systems, which could slow down the global adoption of CBDCs [63,64,65,66].
Stablecoins	Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as a fiat currency like the US dollar, a commodity like gold, or a basket of assets. They aim to combine the benefits of digital currencies—like fast and low-cost transactions—with the price stability of traditional money. Stablecoins are commonly used for trading, payments, and remittances within the crypto ecosystem.	Stablecoins are a type of cryptocurrency designed to reduce the volatility that often plagues traditional cryptocurrencies by tying their value to stable assets like fiat currencies, commodities, or a mix of financial instruments [23,24,25,26]. There are four main types of stablecoins: fiat-collateralized, commodity-backed, crypto-collateralized, and algorithmic. Fiat-backed stablecoins, like USDT and USDC, hold reserves in traditional currencies to maintain stability, while commodity-backed stablecoins, such as Tether Gold (XAUt), are backed by physical assets like gold [67]. Crypto-collateralized stablecoins, like MakerDAO’s DAI, use digital assets as collateral, often requiring more collateral than the value of the stablecoin issued. Algorithmic stablecoins, on the other hand, rely on smart contracts to control the supply of tokens and keep their value stable. Despite their increasing popularity, stablecoins still face significant regulatory scrutiny, particularly around issues of financial stability and compliance, which could slow down their global adoption [68].
Blockchain-based payroll	Blockchain-based payroll is a system that uses blockchain technology to manage and process employee payments. It enables secure, transparent, and automated salary transfers, often using cryptocurrencies or stablecoins. This method reduces transaction costs, ensures faster cross-border payments, and minimizes errors through smart contracts. It is especially useful for global teams, freelancers, and remote workers who need efficient and timely compensation.	Blockchain-based payroll systems are transforming the way employees are compensated by making the process more secure, transparent, and efficient. By eliminating intermediaries and using smart contracts to automate payments, these systems ensure that employees are paid accurately and on time, while also cutting down on administrative costs and minimizing errors [1,27,28,29]. For instance, platforms like Bitwage use blockchain to offer global payroll solutions, giving employees the option to receive their wages in either cryptocurrency or traditional fiat currency [69]. Additionally, the immutable nature of blockchain’s ledger builds trust and helps ensure compliance by providing verifiable records of all payroll transactions, which is essential for meeting regulatory requirements [70]. However, despite the many benefits, there are still challenges to overcome, such as navigating regulatory frameworks, understanding tax implications, and encouraging employee adoption of these systems [71].

outlines how blockchain is transforming banking and payment systems by introducing decentralized structures and real-time transaction capabilities. It highlights key components such as cross-border transactions, central bank digital currencies (CBDCs), decentralized payment networks, stablecoins, and blockchain-based payroll systems. The table illustrates how blockchain enhances transaction speed, lowers costs, and improves transparency and security across payment infrastructures. By minimizing third-party involvement and enabling programmable money flows, blockchain supports more resilient and inclusive financial ecosystems [61].

5.2. Lending and Credit

The blockchain applications of lending and credit involve automated loan underwriting and smart contracts, blockchain-assisted credit scoring, and peer-to-peer (P2P) lending platforms. They serve in the reduction in reliance on traditional credit intermediaries, the ability to make faster decisions through the use of smart contracts, and the more trustful and less risky relationship between borrowers and lenders as a result of being able to connect directly. More generally, they work for a change to an income-scaled, better-distributed credit system—one that is more effective, reliable, and lower-cost. We see a natural linking of this research to the motivations behind DLT (distributed ledger technology) credit peer-to-peer systems because of collaborative lending abilities [61]. Below are the applications of blockchain in lending and credit:

5.2.1. Decentralized Peer-to-Peer (P2P) Lending

Decentralized peer-to-peer (P2P) lending represents a financial ecosystem where people can lend to, and borrow from, each other directly without any traditional banks or intermediaries by utilizing decentralized blockchain technology. Peer-to-peer lending utilizes decentralized blockchain P2P platforms where all transactions occur via smart contracts. P2P lending is less expensive, faster, and more transparent than traditional channels. Traditional lenders have focused on material to lend to, and borrowers receive loans faster and easier, especially in the underserved markets [8,30,31,32].

Decentralized peer-to-peer (P2P) lending, powered by blockchain technology, is disrupting borrowing and lending by enabling lenders and borrowers to transact directly, without traditional financial intermediaries. This practice has increased transparency and security because transactions are recorded on an immutable ledger, which helps reduce the occurrences of fraud and default [72]. Smart contracts use, establish, and execute the terms of loan agreements with greater execution and less need for human intervention, thereby improving efficiency and reducing costs [73]. Blockchain-P2P platforms also assuage issues like herding behavior and platform–borrower collusion by decentralizing the framework decision-making process, which minimizes bias and lending practices [74]. However, regulatory uncertainty, and the need to develop greater adoption, continues to impede the potential network effects to be realized with the technology. While the distribution or disintermediation of financial technology evolves, there are reasons to be optimistic that blockchain can fundamentally reshape P2P financing marketplaces as a more efficient, better alternative to traditional lending models [46,47,48].

5.2.2. Blockchain-Based Credit Scoring

Credit scoring on the blockchain is a credit scoring system that utilizes blockchain technology to collect, store, and evaluate a person’s financial information in a safe and transparent manner. Blockchain credit scoring can leverage alternative data for assessing creditworthiness such as transaction history, utility payments, or peer reviews (especially relevant for unbanked individuals). By leveraging real-time, tamper-proof data, a blockchain approach would enable greater financial inclusion by enabling further access to loans and financial services for more individuals.

Blockchain-based credit scoring systems are changing the way creditworthiness is assessed. With enhanced transparency, security, and efficiency [75], blockchain systems utilize a decentralized ledger to allow accurate credit assessments. Once recorded, credit data is secure, immutable, and accessible only to authorized parties, therefore a blockchain-based ecosystem helps reduce risks for data tampering and unauthorized access [49,76]. In the BACS model, blockchain technology and automated machine learning allow for credit data management and scoring, leading to greater accuracy and efficiency in credit assessment [75]. Intermediaries are non-essential to a decentralized credit scoring model, meaning borrowers and lenders can communicate directly without concern for the loss of data integrity, privacy, and reliability [76]. Blockchain can also provide additional security and assurance to the creditor, by allowing secure aggregation of multiple public and private datasets for the individual borrower, to develop a fuller credit profile [77]. There are still regulatory compliance, data privacy, and standardization challenges that must be addressed to fully take advantage of the benefits of blockchain relationships for credit scoring.

5.2.3. Automated Loan Underwriting

Automated loan underwriting is using algorithms and artificial intelligence to assess and approve loan applications automatically without any human involvement. The algorithms will quickly analyze financial data, credit history, and risk factors to ultimately make a swift, consistent, data driven decision on whether or not to lend the money. Automated underwriting ultimately reduces human error, speeds up approvals and improves efficiency for lenders and borrowers.

Through enabling operational efficiency and boosting security and auditability, blockchain technology is fundamentally revolutionizing traditional loan underwriting. Its decentralized and immutable ledger ensures all transactions are stored permanently, greatly reducing the room for fraud and discretionary mistakes from the underwriters [78]. Use of smart contracts, programmable loan contracts that are written into blockchain protocols, facilitates automated enforcement of loan terms and payment, streamlining the underwriting process and reducing cycle times [79]. Digital identity technology on a blockchain, namely, self-sovereign identity system-based, allows KYC processes to be safe and reusable, reducing duplication and enhancing authentication [80]. Simultaneously, tokenization of loan assets on blockchain technologies enables fractional ownership and hence more liquidity release and sophisticated risk-sharing models [81].

5.3. Investment and Wealth Management

The third application is investment and wealth management within the context of utilizing blockchain technology to improve transparency, accessibility, and automation. This includes exciting innovations such as decentralized autonomous organizations (DAOs), blockchain robo-advisors, fractional ownership, decentralized hedge funds, and tokenized securities. This illustration showcases how these applications provide better portfolio management, real-time asset tracking, and less reliance on centralized institutions. Below are the applications of blockchain in investment and wealth management.

5.3.1. Tokenized Securities

Tokenized securities are digital representations of traditional financial assets, like stocks, bonds, or real estate—that are issued and traded on blockchain platforms. These tokens are backed by real-world assets and provide investors with ownership rights, dividends, or interest, just like conventional securities. Tokenization enables faster, more secure, and cost-effective trading while improving transparency, accessibility, and liquidity in financial markets [50].

Tokenized securities, representing traditional financial instruments like equities and bonds on blockchain platforms, are reshaping investment and wealth management by enhancing liquidity, accessibility, and operational efficiency. By digitizing ownership rights, tokenization facilitates fractional ownership, enabling investors to diversify portfolios with smaller capital allocations and gain access to previously illiquid assets such as real estate and private equity [82,83]. This innovation supports institutional investors’ strategic diversification and financial inclusion goals. Furthermore, blockchain’s transparency and security improve settlement processes and reduce operational risks, driving cost efficiencies [84,85]. As blockchain technology matures, tokenized securities are poised to transform wealth management by providing more efficient, inclusive, and resilient financial services.

5.3.2. Decentralized Hedge Funds

Decentralized hedge funds are investment funds that do not have a central governing authority to manage the fund and make investment decisions. Decentralized hedge funds use Distributed Ledger Technologies (DLTs) and smart contracts to oversee the assets or finances/investments of the hedge fund, and conduct underlying investment activities. This allows contributors to pool capital and simultaneously invest in hedge fund strategies on a decentralized, transparent, automated basis. Decentralized hedge funds operate in a computer code ecosystem that is absent of intermediaries, such as banks and agents, between the contributors and funds of the hedge fund, ultimately reducing costs, time, administrative costs, improving access, and expanding operational efficiency and offering global exposure while maintaining upside unless market conditions curtail upside [51].

Blockchain-based decentralized hedge funds are transforming traditional investment management through greater transparency, cost reductions, and exposure to sophisticated financial instruments. By leveraging smart contracts and decentralized protocols, these funds simplify core investment activities such as asset allocation, rebalancing, and fee distribution—reducing the need for intermediaries and enhancing operational efficiency [86]. This automation reduces administrative complexity and investor participation cost while ensuring verifiable transparency in the shape of tamper-resistant ledgers [87]. The immutable and auditable nature of blockchain minimizes asymmetric information and fosters trust in governance mechanisms [88]. Still, it is fraught with challenges, including regulatory ambiguity, exposures during the phase of smart contract execution, and governance lags in decentralized autonomous organizations (DAOs) [89]. As decentralized finance (DeFi) evolves, its sustainability in the long run will hinge on addressing these systemic risks to effectively blend into mainstream investment management.

5.3.3. Blockchain Robo-Advisors

Blockchain robo-advisors are online investment platforms that leverage blockchain technology to manage and advise on investment portfolios. They make use of smart contracts and decentralized networks to offer transparent, affordable, and efficient investment strategies, which are tailored based on the risk appetite in the majority of cases. Blockchain offers secure, tamper-proof transactions, along with reducing the need for intermediaries, allowing users to obtain personalized investment advice and portfolio management conveniently.

Blockchain-driven robo-advisors are transforming investment management by integrating algorithmic automated advice and the transparency and immutability of blockchain technology. Algorithms in the system compute investors’ risk tolerance and goals to design bespoke portfolios, and every transaction is recorded on a distributed ledger to ensure absolute auditability and transparency [90]. This fusion reduces operational costs and decreases advisory minimums, thereby democratizing access to sophisticated wealth management solutions [52,90]. Additionally, blockchain-based frameworks make smart contracts possible, which are flexible, to personalize investment rules and auto-rebalance portfolios, supporting higher degrees of trust and governance. Despite the advantages being present, regulatory uncertainty, smart contract security vulnerabilities, user experience limitations, and legacy financial system compatibility are key concerns to be addressed to reach their entire potential.

5.3.4. Fractional Ownership of High-Value Assets

Fractional ownership of these high-value assets allows various investors to own a share of expensive assets like properties, artwork, or luxury items through tokenization on blockchain systems. A share of the asset is given to each investor, and it is made available to a larger number of individuals. This reduces the economic burden of possessing high-value assets while ensuring liquidity and transparency as the share can be bought or sold on blockchain-based exchange systems.

Fractional ownership of high-value assets such as real estate, art, and luxury goods via blockchain-based tokenization is revolutionizing investment by enhancing accessibility, liquidity, and transparency. This approach tokenizes physical assets, allowing a multitude of investors to own fractions [91,92]. As such, via tokenization of assets on blockchain platforms, previously closed markets are now accessible to a larger pool of investors, equalizing the playing field and empowering wealth creation [53,91]. Moreover, the tamper-resistant and clear nature of blockchain ensures that transactions are securely stored and traceable, which promotes investor confidence and reduces fraud risk [91]. However, there are concerns, notably on regulatory compliance, methods of asset valuation, and secondary market liquidity [92].

5.3.5. Decentralized Autonomous Organizations (DAOs) for Investment

Investment decentralized autonomous organizations (DAOs) are institutions that leverage blockchain and smart contracts to enable communal investment decision-making without a central authority. In a DAO, investors vote on asset distribution, governance, and investment proposals, providing them with a democratic and transparent way of managing assets. This type of system provides global participation, reduces administrative costs, and presents a decentralized alternative to traditional investment funds with security and autonomy for the investors.

Decentralized autonomous organizations (DAOs) are blockchain-native institutions governed by smart contracts that enable collective decision making without centralized authority, revolutionizing investment governance and asset management architectures. DAOs democratize fund deployment by enabling pooled capital contributions and token-weighted voting on operations and strategy, thus reducing intermediary dependence and enhancing architectural transparency [54,93]. Furthermore, a comprehensive review of DAO governance processes illustrates that while the protocols increase transparency through on-chain proposal and voting systems, they also face challenges such as vote centralization, where “whales” concentrate power, working against decentralization goals [93,94]. Additionally, empirical studies recognize governance weaknesses, such as inconsistent proposal documentation and smart contract vulnerabilities that can undermine both security and democratic ideals [95]. Despite such novel issues, DAOs represent a revolutionary shift in organizational economics from hierarchical to distributed, community-governed structures enabled by blockchain technology [96].

5.4. Stock Trading and Asset Management

The fourth application of blockchain is stock trading and asset management. It entails automated market makers (AMMs) for trading, decentralized derivatives, and stock exchanges on blockchain. These products ensure a transparent, fast trading system, and every transaction is safely stored on the blockchain. Automation allows trades to be processed more quickly and at lower costs and prevents any chance of manipulation or error. Below are the applications of blockchain in stock trading and asset management.

5.4.1. Blockchain-Based Stock Exchanges

Blockchain stock exchanges are trading platforms that utilize blockchain technology to facilitate stock and other securities purchasing and selling. Blockchain stock exchanges provide more transparency, security, and efficiency by recording all transactions on a decentralized, immutable ledger. Blockchain exchanges reduce reliance on intermediaries like brokers, reduce transaction costs, and allow for faster settlement times, potentially revolutionizing the way traditional stock markets operate. Blockchain exchanges also promote greater accessibility with the potential for global access to financial markets.

Blockchain technology revolutionizes traditional stock exchanges by enhancing the efficiency of securities trading, security, and transparency. Blockchain makes possible real-time trades settlement through decentralized ledgers, which reduces reliance on intermediaries and the elimination of delay [23]. Therefore, using blockchain in pre-trade authorization and post-trade clearing reduces the complexity of operations and speeds up settlement through smart contracts [23,97]. Moreover, distributed ledger system studies of securities clearing on European systemic banks show tremendous cost savings and improved data integrity [98]. Moreover, survey studies show that tokenized exchanges have higher transparency and lower transaction costs, but barriers to scalability, confidentiality, and integration into existing market infrastructures remain [55,99].

5.4.2. Automated Market Makers (AMMs) for Trading

Automated market makers (AMMs) are decentralized exchange protocols that utilize algorithms to set prices and enable assets to be traded and sold without using order books or middlemen. AMMs enable users to directly trade with pools of liquidity that are supplied by other users, and these systems price assets automatically depending on demand and supply and offer liquidity as well as smooth trading. AMMs find extensive uses in decentralized finance (DeFi) protocols, enabling efficient, permission-less cryptocurrency exchanges as well as other digital assets.

Automated market makers (AMMs) are revolutionizing trading by making it possible for users to trade assets without the use of conventional intermediaries. AMMs harness smart contracts on blockchain platforms to establish the price of an asset based on the ratio of tokens in liquidity pools, allowing for around-the-clock trading [100]. A Constant Product Market Maker (CPMM) model, pioneered by Uniswap, is still one of the most popular frameworks because of its effective supply and demand balancing mechanism [100,101]. However, the liquidity providers suffer from impermanent loss in cases where the asset prices fluctuate in the pool [101,102]. Therefore, newer AMM models such as auction-managed AMMs and complex invariant functions are on the rise to minimize impermanent loss and supply better liquidity retention [103,104].

5.4.3. Decentralized Derivatives and Margin Trading

Decentralized margin trading and decentralized derivatives are DeFi financial instruments that grant the capacity to buy and sell leveraged positions and contracts without a central exchange. Decentralized derivatives give clients the capacity to buy and sell asset contracts (futures or options) on price fluctuation of base assets like cryptocurrencies, commodities, or equities using smart contracts on blockchains. Margin trading allows users to borrow capital in order to increase their trade volumes, magnifying potential profit or loss with decentralized investment management remaining. The sites offer more transparency, security, and accessibility than traditional finance. Decentralized margin trading and derivatives are revolutionizing financial markets with intermediary-free, efficient, and transparent trading mechanisms. Platforms like perpetual contracts enable traders to hedge or speculate on asset prices by offering continuous, deep liquidity without traditional exchanges [100,102]. Decentralized margin trading protocols also offer users the option to amplify positions using over-collateralized loans, as on platforms like OpenLeverage, which offer support for both long and short leveraged positions [105]. Yet these developments are faced with challenges in the form of regulatory uncertainty and demands for robust risk management frameworks to ensure integration within mainstream financial ecosystems [100,102].

5.5. Insurance and Risk Management

The applications of blockchain insurance and risk management include blockchain-insured policies, parametric insurance, and trade credit insurance. Blockchain offers greater transparency and trust through immutability of records on claims and policies. Parametric insurance, which automatically pays out when conditions are met, is improved upon by smart contracts that pay out without human intervention [56,106]. Below are the applications of blockchain in insurance and risk management.

5.5.1. Blockchain-Based Insurance Policies

Blockchain-based insurance policies make use of blockchain technology for automating the issuance, management, and fulfillment of insurance policies. Smart contracts are used for validating claims automatically, triggering payouts, and enhancing transparency in the process, doing away with intermediaries and fraud. The technology offers speedier, more secure transactions and offers greater trust among insurers and policyholders. Blockchain-based insurance offers the updating of policies in real time and better data management, making the system more convenient and accessible.

Blockchain technology transforms the insurance industry through increased transparency, efficiency, and trust through decentralized and tamper-proof ledgers. For example, the insurance industry is benefited by smart contracts that implement the processing of claims automatically and reduce administrative costs, thereby increasing operational speed and accuracy [107]. Furthermore, platforms such as Etheric demonstrate that open source blockchain smart contract-based insurance systems have the ability to lower the costs of transaction and accelerate settlement of claims by directly integrating policy rules into blockchain systems [108]. Moreover, studies on token-based insurance models show that blockchain enables transparent peer-to-peer risk pooling and parametric triggers for insurance, which offers a cost-efficient model for risk-sharing [109]. However, regulatory compliance, data security, and interoperability are problems to be addressed with further research and uniform frameworks to realize the full change potential of blockchain technology in the insurance industry [57,107].

5.5.2. Parametric Insurance

Parametric insurance is insurance which pays out automatically when certain pre-agreed conditions or parameters are met, as opposed to determination of individual losses. An example under natural disaster is that a parametric policy can pay out if certain weather conditions (e.g., a hurricane of specific speed) are reached. This method streamlines the claims process, accelerates settlements, and minimizes administrative expenses and is thus particularly useful for risks that are objectively quantifiable, like weather-related perils.

Parametric insurance is an alternative to traditional indemnity structures through paying in relation to objective factors such as rainfall or seismograph readings. Through this approach, there is no requirement for loss assessment, and it streamlines the process of paying claims, making it transparent and efficient [58,109]. In agricultural economies, index insurance schemes advantage farmers by ensuring timely payment upon occurrences like drought, enhancing income stability and reducing risk [91,110]. For optimal matching of payments with actual losses, researchers have proposed the use of expectile optimization models that better align payments with actual losses, addressing the persisting challenge of basis risk [111]. But still, contentious issues like data integrity, regulatory compliance, and threshold calibration hold it back from achieving general adoption.

5.5.3. Trade Credit Insurance

Trade credit insurance is the insurance protection provided to firms against non-payment by their customers. It covers the outstanding receivables in case the customer defaults on a payment due to insolvency, long default, or for any other cause. Trade credit insurance safeguards firms from financial risk, maintains cash flow, and allows access to new markets with greater confidence as it insulates them against loss in B2B transactions.

Trade credit insurance serves as a financial tool that protects businesses against the risk of non-payment by their customers, thereby safeguarding receivables and stabilizing cash flow. This insurance mitigates risks such as insolvency, extended payment default, and political uncertainties, which are especially prevalent in international trade [112]. Furthermore, trade credit insurance enhances firms’ ability to finance operations confidently by reducing the financial impact of potential payment failures [113]. However, despite these advantages, companies must carefully consider limitations such as policy exclusions and the cost of premiums, which can influence the decision to adopt such coverage [114]. Ongoing research emphasizes the importance of balancing risk management benefits against economic costs to optimize trade credit insurance utilization.

5.6. Regulatory Technology and Compliance

The application of this technology is regulation technology (RegTech) and compliance. Blockchain transparency and immutability allow the Anti-Money Laundering (AML) and Know Your Customer (KYC) system to be secure, with financial data made tamper-proof and easy to audit in real time [59,115]. Tax filing and financial reporting compliance processes can be automated through the use of smart contracts, which guarantees minimal use of human intervention and potential errors [116]. This automation also speeds up audit processes and minimizes financial institutions’ operational costs. Blockchain enables regulators to make use of real-time, validated data, which makes decision-making and reporting faster and more accurate [117]. Because blockchain operates beyond boundaries, it eases cross-border regulation compliance by enabling trusted data transfer between jurisdictions. Overall, blockchain strengthens institutional and regulatory trust, reduces the compliance burden, and improves the overall efficiency of regulatory oversight. Below are the applications of blockchain in regulatory technology and compliance.

5.6.1. AML/KYC on Blockchain

Blockchain AML and KYC are the use of blockchain technology to ensure more transparency, security, and efficiency in financial transaction compliance. Blockchain can be used to store and verify customer identities securely so that all the parties involved in a transaction are genuine and comply with the regulatory requirements. With the use of unalterable and decentralized records, blockchain can enable sharing of verified customer data between financial institutions with reduced risk of money laundering and fraud at no loss of privacy and regulatory compliance worldwide.

Blockchain provides a new means of anti-money laundering and Know Your Customer compliance through transparent, decentralized, and immutable ledgers. Its capability for real-time transaction tracking enhances auditability and reduces the threat of financial crime [118]. Particularly, blockchain backed e-KYC systems ensure secure identity verification and effective data sharing between institutions without compromising privacy for the individual using self-sovereign identity models [17,119]. However, there are also some challenges, including aligning data protection laws with on chain transparency requirements and interoperability between legacy systems and across regulatory environments. Policy harmonization and technical standardization addressing these issues will be required in order to facilitate large scale adoption of blockchain into compliance systems [120].

5.6.2. Real-Time Auditing and Financial Reporting

Blockchain has the potential to revolutionize auditing by offering verifiable, real-time data that decrease manual reconciliation and improve audit transparency [61,121]. Research has demonstrated that blockchain can enhance fraud detection through immutable data trails, automate compliance checks, and facilitate ongoing auditing [122]. There are still issues, nevertheless, such as integrating blockchain with current systems, a lack of skilled auditors, and unclear regulations [123].

5.6.3. Taxation and Automated Tax Filing

Electronic taxation and filing refer to the application of technology, such as blockchain and artificial intelligence, in streamlining and making tax payments and reporting easier. Automatic tax filing mechanisms allow individuals and organizations to automatically collect, calculate, and pay their tax information to the relevant body with ease and precision, eliminating mistakes and increasing compliance. These kinds of systems will be able to take in up-to-date information, be revised to reflect tax code changes, and generate accurate reports, becoming more effective, less susceptible to fraud, and providing timely payment of taxes.

Blockchain is revolutionizing the filing of taxes and financial reporting through real-time updating of tax accounts and ongoing audit functionality. Its tamper-proof ledger captures every transaction as it occurs, eliminating errors and fraud while compliance trackers are always active [124]. For example, private blockchain platforms used by state tax administrations can securely authenticate bills and reconcile tax returns automatically with transactional data submitted, making tax administration easier and evasions less possible [125]. Moreover, blockchain incorporation into corporate accounting systems supports real-time issuance of financial statements and improves audit preparedness with triple entry principles that preserve external validation and data integrity [126]. But to be able to achieve these benefits, challenges such as establishing legal recourse of blockchain-based submissions, harmonizing protocols within legacy tax systems, and interoperability between jurisdictions must be overcome.

5.6.4. Regulatory Reporting and Compliance Automation

Regulatory reporting and compliance automation utilize technology, including blockchain and AI, to mechanize the process of complying with legal and regulatory requirements across industries. The platforms collect, examine, and report data as needed by regulators automatically, offering timely, precise, and consistent reporting. Compliance is reduced through automation, eliminating potential for human mistakes, increasing efficiency, and keeping companies up to speed with continually changing rules, thus preventing fines and promoting more transparency and accountability.

Blockchain is expanding regulatory reporting and compliance processes through the facilitation of real-time data capture, automated verification, and open audit trails. With immutable ledgers, businesses can make regulatory submissions that are verifiable and accurate with minimal manual intervention [127]. Moreover, third-party confirmation and continuous monitoring are facilitated by blockchain adoption through built-in smart contracts, resulting in more effective internal control and fraud prevention through financial reporting [128]. Sophisticated technology observed in recent developments demonstrates that blockchain can facilitate compliance processes while improving operational efficiency and accountability [123]. But regulatory approval mechanisms and integration with existing systems for reporting must be determined prior to large-scale implementation [126,127].

5.7. Trade Finance and Supply Chain Finance

Blockchain ensures smooth supply chain finance and trade finance transactions via improved traceability, automation, and data integrity. It also captures key drivers such as blockchain-enabled trade settlement, supply chain finance, and real-time tracking of assets. Blockchain helps to eliminate time lag, ensure zero fraud, and enhance coordination among stakeholders by creating the same immutable record of transactions. This merger simplifies supply chain management and clarifies it and enables secure financial deals via global commerce networks [21]. For descriptions of blockchain applications in trade finance and supply chain finance. Below are the applications of blockchain in trade finance and supply chain finance.

5.7.1. Blockchain-Based Trade Settlements

Blockchain settlement of trade uses blockchain technology to automate and enhance the efficiency of settling trade transactions. Rather than using go-betweens and traditional clearinghouses, blockchain enables peer-to-peer settling of trades with enhanced security, speed, and transparency. Smart contracts automatically execute and validate the exchange of assets such that both parties fulfill their obligation. This system decreases settlement periods, lowers cost, and erases the possibility of fraud or error, and therefore it is particularly helpful in global trade and finance markets.

Blockchain is revolutionizing cross-border trade finance and supply chain settlement by making the transactions traceable in real time, reducing the reliance on intermediaries, reducing costs, and simplifying frauds and errors. Blockchain’s tamper-evident ledger records every transaction for every member, giving a single version of the truth to which everyone agrees, and making instantaneous settlements possible [129,130]. Therefore, businesses can process letters of credit and invoice financing at a faster pace, enhance openness, and speed up the receivables’ cycles [130,131]. Further, empirical findings confirm that blockchain use makes financing supply chain members easier by promoting openness and trust among upstream and downstream players [132]. Though, mass deployment is dependent upon how challenges in the aspect of regulatory sanction, standardization of protocols, and compatibility with existing legacy systems are tackled [133].

5.7.2. Supply Chain Finance

Blockchain supply chain finance is transforming trade and supply chain operation by enabling payment, invoice, and financing to be settled in real time more securely, more efficiently, and more transparently. Its decentralized ledger enables complete end to end visibility and automated authentication of transactions among all parties, which improves cash management and reduces the risk of fraud [130]. For example, smart contract regulations may quickly automate agreed invoice and payment terms in minutes rather than days to facilitate trust and liquidity [130]. Moreover, empirical evidence shows that the use of blockchain in supply chain finance lessens the finance constraints and favors small suppliers by facilitating easy access to capital within ecosystem networks [131]. But full acceptance will depend upon settling key issues relating to system interoperability, regulatory settings, and compatibility with already existing infrastructure [133].

5.7.3. Real-Time Asset Tracking for Trade Finance

Real-time asset tracking within trade finance uses technologies like blockchain, IoT, and GPS to track and trace the movement of assets and goods in real-time throughout the supply chain. It enables organizations to attain visibility of the position, status, and ownership of the goods as they transit between the buyer and the supplier. Real-time tracking of trade finance minimizes fraud, delay, or dispute risk through proper documentation and clear, tamper-evident records. It optimizes efficiency, minimizes administrative costs, and facilitates timely payment for all parties.

Blockchain is demystifying supply chain finance as well as trade finance by enabling real-time monitoring and settlement of commodities via an immutable ledger. Blockchain’s decentralized nature provides end to end visibility and authentication of asset transfer, lowering fraud risk and accelerating settlement of payments [129,130]. Thus, invoice financing and trade letters of credit can be executed faster and more transparently to all parties involved [130]. Moreover, empirical data indicate that the implementation of blockchain fosters trust and liquidity for small suppliers as it places supply chain actors in a trusted network [131]. Yet, massive deployment is subject to overcoming system interoperability issues, regulatory policies, and compatibility with the installed infrastructure [133].

5.8. Digital Identity and Fraud Prevention

Blockchain facilitates the development of safe digital identity systems and helps in preventing fraud within the financial industry. It has features such as blockchain-based digital identity, decentralized identity authentication, and cybersecurity. The chart illustrates how blockchain helps in managing and sharing identity credentials of a person safely and reduces the dependency on central databases and reduces the risk of identity theft. Described below are the applications of blockchain in digital identity and fraud prevention.

5.8.1. Blockchain-Based Digital Identity for Financial Services

Blockchain digital identity for financial services allows an individual to safely store and control his/her identity information on a decentralized blockchain platform. It is certified by virtue of cryptographically based authentication, which makes the personal information tamper-proof, secure, and transparent only to the legitimate parties. For financial services, it simplifies the onboard customer process, reduces fraud, and enhances KYC and AML compliance. Blockchain digital identity also encourages privacy by enabling individuals to maintain greater control of their personal information and making possible the ease of making faster, secure financial transactions.

Blockchain-based digital identity systems are reshaping identity verification in financial services by enabling secure, transparent, and decentralized authentication. Traditional identity infrastructures are fragmented and vulnerable to fraud, which hampers onboarding timelines and compliance processes. In contrast, blockchain enables the exchange of verifiable identity credentials with built-in auditability and strong data protection without reliance on centralized repositories [134]. In addition, self-sovereign identity solutions empower individuals to maintain control over their credentials while allowing financial institutions to perform compliance checks in real time and with greater user privacy [135]. Moreover, frameworks developed for blockchain-powered e-KYC processes have demonstrated improved interoperability across institutions and enhanced regulatory transparency [136]. Nevertheless, challenges such as aligning with regulatory requirements, ensuring technical compatibility, and driving user adoption continue to limit wide scale deployment.

5.8.2. Fraud Prevention and Cybersecurity in FinTech

FinTech fraud and cybersecurity involve the implementation of advanced technologies like blockchain, machine learning, and AI to protect financial transactions and customers’ information from exploitation and unauthorized usage. These systems detect suspicious behavior in real time, prevent identity theft, and keep digital platforms secure from cyber threats. Blockchain’s decentralized architecture enhances transparency and integrity of data, while machine learning algorithms learn and adapt in real time to remain ahead of new threats. Through robust cybersecurity controls, FinTech companies can build trust, safeguard assets, and provide regulatory compliance, which enables a safe financial environment for consumers.

Blockchain is strengthening fraud prevention and cyber security in FinTech by offering enhanced security, transparency, and resistance to cyber and financial crime. Centralized legacy financial infrastructures can be hacked and accessed unauthorized. Blockchain’s decentralized cryptography, on the other hand, ensures that customer data and transactions are encrypted and immutable, reducing the risk of fraud significantly [137]. Furthermore, advanced AI-driven anomaly detection systems for blockchain enable real-time transaction monitoring, identifying unusual patterns like double spends or Sybil attacks early and accurately [138]. Yet, mass adoption is prevented by challenges like ensuring system scalability, regulation compliance, and compatibility with current cybersecurity paradigms.

5.8.3. Decentralized Identity Verification

Decentralized identity employs blockchain and other decentralized technologies to allow users to own and control their own identity without the help of a central authority, i.e., an institution or government. Through the use of cryptography, users are able to store and send personal information in an immutable manner securely. This tech enhances privacy, reduces the risk of identity theft, and imparts efficiency to processes like KYC (Know Your Customer) and onboarding. Decentralized identity verification allows users to take greater ownership of their own personal information while giving security and compliance to enterprises, like finance and healthcare.

Blockchain is transforming digital identity verification in finance by enabling decentralized, tamper evident, and secure identity management. Traditional systems are fragmented, susceptible to fraud, and consequently slow down client onboarding while overwhelming compliance processes. Blockchain, however, enables audited identity credentials that are user-controlled, thereby reducing the dependence on centralized repositories while lessening the risk of identity theft [134]. Additionally, self-sovereign identity systems enable users to preserve privacy while permitting financial institutions to perform authentication checks in real time [135]. Furthermore, the literature shows that blockchain based electronic Know Your Customer systems have the potential to enhance interoperability between institutions and comply with compliance expectations [119]. However, regulatory approval issues, compatibility of technologies, and user acceptance are some of the major hurdles to mass adoption.

5.9. Crowdfunding and Alternative Financing

Blockchain is transforming alternative finance and crowdfunding through the use of open and decentralized funding models. It includes models such as security token offerings (STOs), initial coin offerings (ICOs), and crowd-sourced investment platforms based on blockchain. Blockchain minimizes intermediaries, reduces fundraising thresholds, and enables traceability of investor funds. Through the use of permanent yet programmable smart contracts, blockchain provides more secure, efficient, and universally accessible financing for startups and small businesses. Below are descriptions of blockchain applications in crowd funding and alternative financing.

5.9.1. Security Token Offerings (STOs)

Security token offerings (STOs) are fund-raising procedures where firms release digital tokens that represent share or ownership of an underlying asset, such as equity, debt, or property. STOs are distinct from initial coin offerings (ICOs), which emit utility tokens. STOs are governed and compliant with securities law, and what they create are tokens that are supported by real assets and give investors legal rights. STOs offer enhanced security, transparency, and liquidity as a result of their basis on blockchain technology, allowing fractional ownership and easier trading of otherwise illiquid assets.

Security token offerings are a critical innovation in alternative finance because they enable firms to issue regulated digital securities on blockchain platforms, therefore vesting investors with rights over future revenues. In contrast to equity financing, STOs enable fractional ownership and secondary markets, enhancing liquidity and opening up global investment opportunities. Empirical research indicates that STO characteristics such as fungibility and transferability are quality signals, improving fundraising performance and facilitating investor trust [139]. Furthermore, relative to standard loan guarantee mechanisms, STOs fare better in the context of asymmetric information, although their efficiency is not less sensitive to market risk factors [132]. But STO adoption is still restrained by the intricacies of bridging securities regulation across different jurisdictions, hindering scalability and wider market adoption.

5.9.2. Initial Coin Offerings (ICOs) for FinTech Startups

Initial coin offerings (ICOs) of FinTech startups are a funding method in which startups issue new cryptocurrency tokens and sell them to investors in return for funds in the form of current currencies like Bitcoin or Ethereum. ICOs allow startups to collect funds in an instant manner without going to conventional financial institutions or venture capitalists. They may serve as utility tokens within the startup environment, granting their owners access to products or services after the platform launches. While ICOs offer exposure to pre-stage investments, they also expose investors to regulatory risk along with fraud, thus due diligence is crucial to investors.

Initial coin offerings are a critical FinTech startup funding innovation in the sense that they allow token-based financing on blockchain platforms. The system allows startups to design tokens that represent either security or utility, opening the door to involve global investors and democratize early-stage investment access [139]. Empirical research indicates that open ICO processes, such as openly released code and presale offerings, increase investor trust and fundraising success [140,141]. But if tokens are investment contracts, then ICOs fall under the regulation of securities laws, which vary across locations and introduce legal sophistication [142]. Moreover, continued vulnerabilities such as market manipulation, token price instability, and an absence of investor safeguards underscore the need for enhanced regulation and greater protection to ensure the long-term stability of ICOs [143].

5.9.3. Blockchain-Based Crowd-Sourced Investment

Blockchain crowd-sourced investment uses blockchain technology to enable numerous individuals to pool money and invest collectively in an asset or project as a group without the use of intermediaries like banks or investment firms. Tokenization enables the investors to receive digital tokens representing the proportionate interest in the investment. Blockchain offers transparency, security, and good governance of funds, and smart contracts enable automatic return or distribution of profits. This process democratizes investment, reduces cost, and enables global participation and is particularly useful in the case of venture capital projects, real estate, and start-ups.

Blockchain-funded investment platforms are transforming decentralized crowdfunding by bridging startup companies and investors directly, thereby enhancing transparency, security, and cost efficiency. Such platforms employ token-based equity representation, making fractional ownership and mass participation in international markets possible [144,145]. Smart contract applications enable the automation of allocation and transfer of funds processes, reducing administrative complexity and increasing investor trust [145]. Moreover, the immutability of blockchain reduces fraud risk and builds trust, essential for effective capital raising in distributed environments [144]. But the absence of harmonized legislations continues to hinder widespread acceptance due to variation in how the jurisdictions regulate digital token offerings [146]. Additionally, there are pending issues such as investment risk, lack of legal recourse, and infrastructure constraints that have to be resolved in order to be able to fully exploit blockchain-enabled investment platforms.

5.10. Financial Inclusion and Micropayments

Blockchain supports financial inclusion and micropayments by providing cost-effective, low-cost financial services to disadvantaged populations. It includes applications such as blockchain micropayments, microlending to unbanked, and cross-border mobile money systems. The chart indicates how blockchain supports saving transaction fees, expansion of access to financial services, and circumvention of traditional infrastructure limitations. By enabling safe and efficient mini-transactions, blockchain fosters inclusive economic engagement particularly in developing regions. Below, the applications of blockchain in financial inclusion and micropayments are described.

5.10.1. Blockchain-Based Micropayments

Blockchain micropayments make inexpensive, low-value transactions possible to be conducted inexpensively and securely on a blockchain network. With cryptocurrencies or tokens, users are able to pay small amounts of money for digital material or services without incurring costly transaction fees traditionally associated with traditional payment systems. This makes it possible to pay for low-value transactions, such as online content, microservices, or donations, in inexpensive and fast manners. Blockchain’s distributed characteristic offers transparency, security, and faster settlement, making it ideal for applications or platforms that rely on many frequent low-value payments.

Blockchain micropayment systems have the potential to transform financial inclusion by means of low value and scalable microtransactions. Traditional payment infrastructures impose exorbitant fees, making small value transactions impossible in poor communities. However, blockchain technologies such as hash chain-based MicroBTC schemes enable peer-to-peer cash transfer with minimal transaction charges and speedy confirmation time [147]. Second layer solutions also enhance scalability by leveraging payment channels and off chain storage to manage micropayment routing efficiently and also clear up chain bottlenecks [148]. Despite this, there remain issues with network scalability and infrastructure requirements that must be addressed in order to deliver legitimate financial services to previously excluded communities.

5.10.2. Microfinances for the Unbanked

Microfinancing for the unbanked involves offering small loans, savings, and financial services to individuals who lack access to traditional channels of banking, typically in rural or underserved areas. Through blockchain and mobile technologies, microfinance institutions are able to offer more secure, transparent, and less expensive financial services. These platforms offer the unbanked access to credit, savings, and insurance that enables them to start businesses, improve living conditions, or endure financial crises. Microfinancing for the unbanked promotes financial inclusion, which helps to lift people out of poverty and stimulate economic growth. It achieves this in developing nations.

Blockchain-based microfinance platforms are promoting financial inclusion by enabling the unbanked to access affordable lending and savings services. The platforms provide peer-to-peer secure transactions in real time, allowing microloans and savings accounts to be obtained independently of traditional banks [149]. By eliminating intermediaries, blockchain reduces the cost of transactions and enables microfinance institutions to cover rural areas at lower costs [150]. Additionally, decentralized loan ledgers enable greater transparency and trust by recording all transactions immutably, as this is necessary in order to build credibility among users [150]. There are, however, regulatory framework, digital infrastructure, and financial literacy issues that must be addressed in order to fully harness the capabilities of blockchain for the underserved [105].

5.10.3. Blockchain-Based Cross-Border Mobile Money

Blockchain-based cross-border mobile money allows people to receive and send money across borders through mobile phones by leveraging the blockchain technology for transparent, low-cost, and secure transactions. Blockchain, through the utilization of decentralized ledgers, allows for faster settlement times and reduced reliance on traditional financial intermediaries, such as banks. The platform liberates people, especially in emerging countries, to access financial services, international remittances, and cross-border trade more easily and at reduced costs. Blockchain-based cross-border mobile money enhances financial inclusion and is a less costly alternative to conventional remittance flows [151].

Blockchain-based cross-border mobile money platforms are emerging as transformative tools for financial inclusion by enabling low cost and instant international remittances. Traditional systems involve multiple intermediaries, which drive up costs and extend processing times for low income or rural users. Blockchain solutions such as RippleNet and Stellar offer peer-to-peer fund transfers with enhanced transparency and encrypted records, which reduce fees and settlement delays significantly [152]. In addition, studies show that blockchain-enabled remittance systems can lower transaction costs by up to ninety-nine percent compared to conventional networks, while reducing settlement times from days to seconds [152]. Nevertheless, regulatory compliance, cybersecurity safeguards, and the ability to operate at scale must be addressed before these platforms can achieve widespread adoption.

5.11. Smart Contracts and Automation in FinTech

Blockchain enables the automation of financial processes using smart contracts, which execute predetermined actions automatically without the need for human intervention. It encompasses features such as automated smart contract escrow services, financial data sharing, and automatic loan repayment. The smart contracts of blockchain enhance efficiency, reduce operational risk, and enhance compliance by executing transactions in line with predefined rules. This automation fosters greater reliability and transparency of FinTech activities towards eased service delivery in a wide range of financial applications. Below, the applications of blockchain in smart contracts and automation are described.

5.11.1. Automated Smart Contract Escrow Services

Automated smart contract escrow platforms utilize blockchain-built smart contracts to safely hold and release funds or assets during a transaction such that both parties complete their end of the agreement prior to finalizing the transaction. Within this framework, the smart contract automatically completes predetermined terms—e.g., paying once goods are received or services are delivered—without any intermediary. This enhances trust, reduces fraud, and lowers transaction costs by removing the need for third-party escrow agents. It is particularly useful in e-commerce, property transactions, and freelance agreements.

Smart contract escrow services are advocating security and efficiency in payments by doing away with the use of traditional intermediaries. The services bind pre-agreed conditions in code so that funds are automatically released upon fulfilment of the specified conditions [153]. For example, deployment on blockchain platforms such as Ethereum enables autonomous execution of escrow that guarantees integrity through an unalterable record of all transactions [154]. Moreover, research confirms that escrow smart contracts deployed with dual deposit schemes can ensure fairness of engagement by buyer and seller without the involvement of trusted third parties [154]. Broader adoption necessitates legal acceptance of such contracts and integration of trusted oracle systems to validate off-chain occurrences [154]. Despite these challenges the emergence of smart contract escrow platforms is a big step towards automated and trustless financial arrangements.

5.11.2. Financial Data Sharing with Smart Contracts

Financial data sharing with smart contracts uses blockchain-based smart contracts for securely sharing and verifying financial data among multiple parties without intermediaries. Smart contracts enforce things to happen automatically, such as granting access to information or transferring payment, based on pre-agreed terms. Use of blockchain renders the information tamper-proof, clear, and accessible to authorized parties only, and enables better privacy with reduced opportunities for fraud. This process can render processes like credit analysis, loan approval, and compliance reporting more efficient, more secure, and enhanced in financial transaction efficiency.

Smart contract platforms are enhancing financial data sharing in that they offer secure, automated, and transparent transactions without central intermediaries. They enable real time deployment of data exchange agreements using code-embedded conditions, which enhances data integrity and privacy [155]. In addition, advanced deployments on Chainlink make platform support safe across institutional data feeds via decentralized oracles, powering real time financial insight while preserving confidentiality [156]. Nevertheless, mass adoption is contingent on resolving regulatory compliance, legacy system integration, and scalability to support enterprise scale data sharing in the long term.

5.11.3. Automated Loan Repayments

Automated loan payment uses smart contracts and blockchain technology to automate periodic loan payment scheduling and processing. The smart contract verifies the borrower’s payment conditions as per the mutually agreed terms such as amount and date of payment and then processes the payments automatically. The system prevents late payments, reduces the likelihood of missing deadlines, and enhances lenders and borrowers’ transparency. Automated repayment of loans can simplify debt servicing, lower admin costs, and enhance efficiency in personal, business, or peer-to-peer lending sites.

Blockchain loan repayment systems make repayments automatic via smart contracts, which apply loan conditions without the need for human action or third-party involvement. Such systems trigger repayments automatically on the satisfaction of conditions such as a predetermined due date, reducing operational cost and avoiding human mistakes [147]. Additionally, novel dynamic repayment models change from time to time based on interest rate adjustments or borrower status, increasing flexibility and repayment effectiveness [148]. Despite the potential for expanding financial inclusion via low cost and efficient loan management, broader deployment is hampered by challenges of regulatory infrastructure, harmonization with current financial infrastructures, and end-user take-up

6. Challenges and Limitations of Blockchain in FinTech

6.1. Energy Consumption

Power consumption is a major issue for some blockchain systems, especially true for those using Proof of Work (PoW) consensus algorithms. This not only raises environmental concerns but also increases operational costs [157]. Among the many uses of blockchain technology since its inception in 2008, Bitcoin and similar other cryptocurrencies have been in circulation the longest. In various studies, it has been highlighted that the electricity consumption for a single Bitcoin transaction can reach terawatt-hours, leading to a significant amount of carbon footprint [158]. Researchers also claimed that big data programs like blockchain may exceed the long-term storage costs related to electronic money transfers and transaction data [159].

6.2. Scalability

Both the transaction throughput and the confirmation delay are among the most important characteristics that are examined when it comes to the performance of blockchain technology. The implementation of blockchain transactions takes some time because of the complexities, encryption, and distributed nature of the blockchain, which is necessary for retaining decentralization. This limitation has been acknowledged in several prior studies [160]. The financial sector includes a substantial portion of users, approximately fifty percent of the global population. This indicates that the need for handling millions of transactions in a short period of time cannot be achieved.

6.3. Legal Jurisdiction and Enforceability

Due to the varying restrictions of each nation or locality regarding their constitutions, no universal regulatory authority exists for blockchain-based financial transactions and currencies. The decentralized and borderless nature of blockchain often conflicts with traditional regulatory frameworks. Given the varying viewpoints and interpretations individuals have about contracts, it is imperative to establish rules for the interpretation and enforcement of contractual law. Just as contract law differs between jurisdictions based on the locations and parties involved, the enforceability of smart contracts also varies accordingly [161].

6.4. Standardization and Interoperability

The ability to work together across various sectors, countries, and currencies is essential in the financial sector, highlighting the importance of interoperability. The lack of standardized protocols and formats for blockchain-based financial system architecture presents a challenge in achieving interoperability. The adoption of blockchain technology is presently in its nascent phase. Though it may appear complex, it is anticipated that a general structure will develop, leading to broader acceptance [162]. Nevertheless, within this constraint, it is essential to address interoperability challenges to enable major platforms to effectively exchange and share transactions. In addition, a regulatory agency with the authority to prescribe and standardize it is desperately needed, similar to the Internet Engineering Task Force’s work with internet standards [163].

6.5. Privacy and Security

Financial technology companies handle extremely sensitive information pertaining to both individuals and businesses. Fraud, security breaches, and cyberattacks represent the foremost challenges facing the advancement of FinTech. Smart contracts may be exploited due to coding flaws, and third-party applications like exchanges and wallets are frequent targets of cyberattacks [164]. As FinTech services increasingly transition to online platforms, enterprises are gathering vast quantities of data regarding customers and their insights. Securely transferring these data to required parties and governments are equally difficult. Most of the studies concluded with the advantages of using blockchain technology are also raising concerns about safeguarding the financial and other interests of the users [165].

6.6. Talent Acquisition

One of the major sectors that hires software engineers and other IT professionals is the financial industry. Especially in the development, maintenance, and operation of blockchain-based systems that require a variety of qualified employees who are in short supply, which can hinder the financial sector’s execution [166]. Previous studies also indicate that transitioning to blockchain technology is getting more difficult and time-consuming due to the lack of skilled blockchain developers and engineers [167]. Consequently, smaller financial institutions may exhibit hesitation in making investments alongside existing system modifications. Particularly because blockchain is still in a developmental phase, the regulatory framework within the industry remains quite uncertain [168].

6.7. Evaluating the Reliability of Market Forecasts

Grand View Research (GVR) provided the data shown in Figure 2, which provides insightful market information about blockchain adoption patterns in the FinTech industry. But it is crucial to evaluate these third-party market analyses closely for accuracy. GVR usually combines professional interviews, specialized models for prediction, and secondary data assessment. Although these approaches offer strategic overviews and directional estimates, they might not have the peer-review rigor and methodological transparency of academic research. Additionally, the results’ interpretive power is constrained by the lack of thorough sampling protocols, data validation methods, and replication standards [45,169]. Therefore, to ensure robustness and contextual accuracy, GVR data must be combined with empirical research and authoritative literature, even though it can inform broader market narratives.

7. Conclusions

This review highlights the transformative effect of blockchain technology in various FinTech fields by providing a decentralized, limpid, and inviolable infrastructure for financial transactions and services. This article determines eleven fundamental applications from digital payment and lending to regulatory compliance and smart contracts demonstrating how blockchain effectively improves the operational efficiency, security, and trust of financial ecosystems. Through systematic synthesis in a structured format, this review demonstrates that blockchain, besides facilitating easier current finance processes, also enhances financial inclusion and promotes alternative finance models. Despite these advantages, several challenges remain, including regulatory ambiguity, scalability issues, interoperability gaps, and cybersecurity threats. These constraints must be addressed through coordinated efforts among stakeholders, including regulators, technology developers, and financial institutions. As blockchain adoption matures, its integration with emerging technologies such as artificial intelligence and the Internet of Things will likely further revolutionize financial service delivery. This review contributes to the academic and professional discourse by consolidating current knowledge, highlighting implementation challenges, and outlining avenues for future research. It serves as a foundation for developing strategic, regulatory, and technological frameworks that can harness blockchain’s full potential in shaping the future of global financial systems.

8. Implications

The use of blockchain technology in the FinTech sector has far-reaching consequences for financial transactions, regulation, and socio-economic development. On a basic level, the decentralization of blockchain introduces transparency, immutability, and automation to key financial services, disrupting traditional models that rely heavily on intermediaries. Economically, blockchain reduces the transaction cost, enhances the speed of settlement, and renders systems more dependable. Smart contracts, for instance, programmatically implement agreements without human involvement, reducing processing time and operational risk. All these serve to render the financial ecosystem responsible and efficient. Social impacts are particularly significant in the field of financial inclusion. Blockchain supports low-fee micropayments and decentralized identity systems that expand financial services to unbanked and underserved populations. Such aspects are highly relevant in emerging economies, where traditional banking infrastructure is underdeveloped. Empowerment of marginalized groups through blockchain-supported platforms advances broader inclusion in formal economic activities.

However, widespread adoption is faced with challenges such as regulatory uncertainty, interoperability limitations, data privacy, and the lack of standardized governance models. The legal enforceability of smart contracts remains a contentious topic in jurisdictions that have not modernized their digital asset laws. Moreover, the fragmented nature of global blockchain standards complicates cross-border implementation and scalability further. At the policy level, there has to be cooperation among regulators, technologists, and financial institutions. Regulatory frameworks must be created that balance security and innovation, protect consumer rights, and ensure system integrity. There is also a need for investment in blockchain literacy and professional development to address the shortage of skilled talent and promote responsible innovation. For researchers, the evolving blockchain–FinTech nexus offers rich ground for further study. Issues such as the comparative efficacy of blockchain versus conventional systems, socio-economic ramifications of the adoption of blockchain, and regulation of decentralized financial networks deserve detailed empirical examination. In conclusion, while blockchain technology holds revolutionary potential for FinTech, its benefits can be realized only by surmounting regulatory, technological, and human capital limitations. With structured collaboration and strategic planning, blockchain can lead the way in creating a more inclusive, efficient, and secure global financial system. To address the blockchain-related challenges in the financial sector, future study can be explored:

• What effects do differences in national regulatory frameworks have on blockchain-based financial services’ scalability and compliance?
• In real-time transaction contexts, which architectural approaches facilitate the most seamless integration of blockchain networks with legacy financial systems?
• Which consensus techniques are best suited to reducing security flaws in financial companies authorized blockchain applications?