Fintech and The Business Opportunities in Sports Industry

Fintech is an amalgam of two words: finance and technology. It is concerned with the application of technology in various industries with the intent of streamlining operations, improving user experience, and generating more profit. The sports industry is no exception, and within it, technology is rapidly being implemented into various structures such as… This article will examine the various ways technology is intercalated with different subsectors of sports, the impact and outcomes it has had, the future of fintech in the sports industry.

In the aftermath of the COVID-19 pandemic, the world has seen a revolution in online data sharing. One of the most promising developments has been the creation of blockchains, which are essentially virtual systems in which records of transactions are shared across multiple independent computers through a peer-to-peer network. The use of blockchain technology has facilitated rapid data transfer, financial transactions, verifications, and security on several platforms. The data on blockchains are encrypted, and the whole system is decentralized. This makes them extremely secure and decentralized, in contrast to traditional banking ledgers.

One area where blockchain technology continues to be implemented is in sports broadcasts. With the data sharing options available on these networks, viewing data by consumers can be shared with broadcasters, who in turn can provide viewing content based on the consumers’ individual preferences. This provides advantages to the sporting events, teams, and athletes as well, as it allows them to connect with a larger and more suitable target audience. Sports equipment and fan merchandise can also be advertised more accurately for each person. With consumer and broadcaster data both existing on a decentralized network, fears of manipulation by a central entity are alleviated. Although the use of blockchains for channel broadcasting is still in its early stages, there has been a widespread acceptance of it in the media industry. According to a 2019 survey by the International Trade Association for the Broadcast & Media Industry (IABM), 3% of media companies responded that they have integrated some form of blockchain technology, while over 55% said they were likely to implement it in the future [1].

Another promising use of blockchain technology is in the esports sector, which has grown rapidly in recent years and, unlike other international sports, is unregulated by a central authority. This has created a vacuum for a virtual transaction verification ledger, to ensure security, speed, and low costs. The transactions consumers make include online purchases, subscriptions, event tickets, participation fees, and staking. With blockchains, game developers and hosting platforms can seamlessly connect with their player base on fast and secure servers. Cryptocurrencies have potential use in this sector, where they can be implemented to fill various smaller niches in a virtual environment. Enjin Coin (ENJ) is one such token; it is specifically designed for the requirements of the gaming community [2]. It allows developers to create virtual goods, which are backed by Enjin Coins as the parent currency. A customizable payment gateway, smart wallet, and almost zero costs on the Effinity network make this the ideal advancement in esports transactions.

Fintech has potential uses on-field as well. Though not directly related to financial transactions, the monitoring of player data can be done in real-time using wearable technology. Blockchains can easily track and store information about player performance, vitals, and activities, allowing the teams and followers to stay up to speed on their favorite players. This also provides an opportunity for new talent to emerge, showcasing player data to recruiters in a safe, un-temperable way. All in all, this streamlines the process of signing new players, setting college scholarship criteria, and betting on the best performing players. Financial rewards for outstanding players, traditionally decided by a panel of judges evaluating coarse numbers, can also be done via the performance quantification by the metrics recorded on the blockchains. This theory was put forward by Sandy Khaund in a chapter of the book “21st Century Sports” [3].

A significant portion of the sports industry consists of sports memorabilia. In 2018, it was estimated that the total worth of the sports memorabilia businesses was over $5.4 annually in the US alone [4]. With such huge trade volumes and increasing difficulty in keeping tabs on all trades, there has been an increase in the trading of counterfeit products. A documented claim and an officially verified track of the chain of custody of an item are paramount in the verification of goods. In the digital age of today, these too have become easy to manipulate and counterfeit. Online ledgers in the form of blockchains can solve this problem, allowing ownership and transactions to be verified on independent and trusted networks with no affiliation with any person or company. Value preservation and reduction in fraud will help improve the growth of the memorabilia market.

Fintech connects sports fans across the globe, with each other and with the events they look forward to. Online marketplaces have become a hotspot for selling tickets to sporting events, respecting COVID 19 social distancing norms, this time it will be a Digital Olympics 2021. We are the witness of The Digital Virtual Replacement Technology in this Olympics 2021. The technologies transforming the digital billboard into an audience-specific advertisement that depends on geographical location and situation-centric strategy (Artificial Intelligence-driven approach). I am looking at it from a Fintech lens – by applying innovation, creativity, and Fintech in Olympics 2021 to bring the financial movement on track even if the audience is not present. Digital Olympics is one of its kind of experience.

Various broadcasting channels offer pay-per-view on a wide range of global tournaments, mostly in combat sports such as MMA and boxing. They incorporate embedded finance options within their platform, which allows the PPV costs to reach them directly, securely, and with no middlemen.

To conclude, it is fair to say that Fintech has a pivotal role to play in the advancement of sports shortly. The transition into a digital age bodes farewell to ticket sellers, merchandise traders, and betting bookies operating manually or over the phone. Blockchain technology is a promising avenue for investment, concerning sports as well as many other traditionally bank-financed industries. The on-field uses of wearable technology linked to a blockchain cannot be overstated and will revolutionize the way we interact with our favorite players. The result of integrating Fintechs in the sports industry is a much more engaging, exciting, and financially secure form of sports than ever before.

References:

1. https://theiabm.org/media-technology-special-blockchain-2/
2. https://coincentral.com/what-is-enjin-coin-enj-beginners-guide/
3. Khaund S. (2020) Blockchain: From Fintech to the Future of Sport. In: Schmidt S.L. (eds) 21st Century Sports. Future of Business and Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-50801-2_11
4. https://www.sportico.com/business/commerce/2018/sports-memorabilia-market-value-939/