The winds of technological change have been brewing across the financial industry for quite a while, and concepts such as automated risk management, algorithmic trading, and digital banking are no longer futuristic but rather essential to modern finance.
Two particularly groundbreaking technologies at the core of this transformation are AI (artificial intelligence) and blockchain, (besides big data and machine learning, of course). In the dynamic world of financial services, blockchain and AI, Generative AI (GenAI) in particular, have become linchpins for transformative change, redefining the strategic and operational horizons of the industry.
Did you know that the value of the cryptocurrency market surpassed a staggering USD 2.9 trillion in value as of late January 2026? This exponential growth only underscores the sheer impact of AI and blockchain technology on the financial landscape. Let’s do a deep dive.
The Rise of AI and Blockchain in Fintech
AI has rapidly developed into a cornerstone of fintech innovation. AI-powered tools are being integrated across a gamut of financial businesses and into various financial apps for delivering personalised experiences, improving decision making, and streamlining processes.
Perhaps one of the biggest and most transformative AI and blockchain changes are the ones taking the real estate world by a storm. The biggest one, undoubtedly, has been the possibility of fractional real estate ownership and tokenization. Using blockchain, they divide a piece of property, like a plot of land or a commercial structure, into fractional shares, which are represented by digital tokens which can be traded online securely. Other critical applications include securitisation, loan, and digital asset ownership, private tokenized real estate funds, and under-construction or undeveloped projects.
This method not only democratises real estate investment, but also creates unprecedented liquidity, promising to reshape the sector. According to Deloitte’s projections, tokenized real estate in 2034 could possibly reach a market cap of USD 4 trillion, which is far more than its 2024 market cap of USD 0.3 trillion. Overall, real estate businesses need to assess complex technical, regulatory, and legal challenges of shifting to tokenized real estate.
In the world of financial risk management, casualty and property insurers have been using AI to unveil fee-based risk management services. These offerings, built on the basis of prevent and models, include white-label and data-sharing partnerships and help protect customers and drive growth amid increasing climate risks.
When it comes to statistics, S&P Global showed that the top 50 of the world’s P&C (Property and Casualty) Insurers boosted its revenues from USD 1.5 trillion in 2023 to USD 1.62 trillion in 2023, up a whopping 8.3%. Going ahead, insurers need to develop more cutting-edge and innovative prevent-and-predict services to further cement their AI governance in terms of risk management.
Take banking and capital markets, for instance, specifically blockchain-based cross-border multibank payment networks. These blockchain-designed tokenized currency systems have transformed cross-border payments, with tokenized commercial bank deposits and stablecoins well on their way to becoming chief digital cash instruments.
In fact, according to Deloitte’s projections, 25% of large-value international transfers will be settled on these platforms by 2030, reducing transaction costs by as much as 12.5%, resulting in savings of over USD 50 billion. With AI and blockchain set to integrate even deeper into the banking and capital market industry, banks need to develop value-added services to multiple and maintain corporate relationships, in tandem with a strong governance framework, as well as assess the operational effect of transferring transaction flows to blockchain exchanges.
Did you know that AI is changing the face of ETFs (exchange traded funds) and active ETF management too? The investment scenario is shifting from mutual funds to active ETFs, as the latter offer lower costs, tax efficiency, flexibility, and transparency, combining the benefits of ETFs with active management.
Also, AI-driven platforms promise a host of adviser-led investment benefits, but without the fees associated traditionally with advisers. According to ETFGI, active ETF assets worldwide have grown from USD 1.17 trillion at the end of 2024 to a record-breaking USD 1.86 trillion by the end of November 2025. Going ahead, investment managers need to and expand active ETF offerings by building robust governance frameworks and authorised participant networks.
If the landscape for AI-powered digital frauds is changing, so is the landscape for AI-powered fraud detection. AI-powered multimodal tech is all powered-up and ready to better fraud detection in the P&C sector by integrating real-time analysis. It’s predicted that insurers could reduce fraudulent claims, saving anywhere between USD 80 and 160 billion by 2032. AI can analyse sensor, video, audio, images, and text data to identify anomalies and patterns, improving the investigative process. However, insurers need to combine AI with human oversight to minimise AI risk and effectively prevent and detect fraud.
AI, Blockchain, and Modern Fintech: Stepping Carefully Into The Future
Blockchain has redefined traditional financial systems by offering unparalleled efficiency and transparency and by allowing real-time, decentralised, and secure digital transactions. Despite the obvious benefits, this integration is challenging, as the evolving regulatory landscape is particularly complex.
For instance, PwC’s 6th Annual Global Crypto Hedge Fund Report highlights that the biggest hurdle to digital asset-focused enterprises and hedge funds adopting tokenized assets is regulatory challenges.
Additionally, there are newer risks such as cybersecurity vulnerabilities and including algorithmic bias, making transparent governance and rigorous oversight necessary. This is where the concept of XAI (explainable AI) has gained traction, requiring the need for accountability and transparency in automated decision-making, especially within highly regulated financial markets.
In case you missed:
- Tokenization of Real-World Assets: Assets Going Digital?
- Are Cryptocurrencies Becoming an Asset Class?
- Blockchain-Based Digital Identity: The Future Of Verification Is Here
- Millennials And Gen Z Are Using AI For Investment. How Prudent Is It?
- NFTs vs. RWA Tokenization – The Future of Digital Asset Ownership
- A Beginner’s Guide to Cryptocurrency Trading in India – Part 1
- How AI Can Fortify Cryptocurrency Security
- The Stablecoin Story in Cryptocurrency
- Agentic AI and its Future in the Fintech Revolution
- A Beginner’s Guide to Cryptocurrency Trading in India – Part 2
