There's no shortage of companies working to disrupt the financial services industry. Shares of fintech companies like Square and PayPal have soared in recent years, with investors betting there's money to be made removing friction and reducing costs in the payments industry. As the world continues to shift away from cash and toward digital payments, enabling those payments is a huge opportunity.

While the opportunity is vast, so is the risk. Many fintech stocks trade at nosebleed valuations, and picking out the long-term winners from the losers involves plenty of luck. The potential upside is big, but so is the potential downside. Is Square really worth over $30 billion? I have no idea.

It's possible to bet on fintech without paying an arm and a leg for future profits that may never arrive. This may come as a surprise, but I'm talking about International Business Machines (IBM 0.07%). IBM is already deeply entrenched in the financial services industry. It counts 97% of the world's largest banks as customers, and 90% of global credit card transactions run through the company's mainframe systems. But the century-old tech giant is also a disrupter. With the official launch of the IBM Blockchain World Wire, the company is aiming to change cross-border payments forever.

A hand with a hologram of a globe.

Image source: Getty Images.

A real-world use for cryptocurrency

The process of moving money across borders is slow and expensive. The settlement and clearing processes are separate; multiple middlemen add complexity, time, and cost; and changing exchange rates introduce currency risk. The whole process can take days, an absurdity in an increasingly digital and mobile world.

IBM is aiming to solve the cross-border payments problem with a blockchain platform that integrates with existing payment systems. IBM Blockchain World Wire is capable of clearing and settling cross-border payments in seconds. The system transmits monetary value using "stable coins," which are cryptocurrencies that can be pegged to a currency to minimize price volatility. World Wire currently supports Stellar Lumens and a U.S. dollar stable coin, and IBM plans to expand the number of settlement assets based on client demand.

A cross-border payment using World Wire involves converting the first fiat currency into the chosen digital asset, while simultaneously converting the digital asset into the second fiat currency. The digital asset itself supplies settlement instructions, and the speed of the transaction eliminates much of the currency risk.

World Wire is currently in limited production, available in 72 countries and supporting 47 currencies. IBM is working to grow the network, guided by local regulations.

Check out the latest earnings call transcript for IBM.

Another blockchain bet

With World Wire, IBM continues its strategy of building blockchain networks that have the potential to become industry standard solutions. Other examples include IBM Food Trust, a blockchain network that can trace food throughout the supply chain, and TradeLens, a blockchain platform in collaboration with Maersk that aims to make the global shipping industry more efficient.

IBM's existing relationships with banks and financial institutions give it a major advantage as it rolls out World Wire to more countries and looks to add financial institutions to the network. If the system delivers on its promises, it could expand as quickly as regulations allow.

It's hard to say how much IBM's various blockchain bets will contribute to the company's bottom line in the long run. But with the stock trading for just 10 times IBM's adjusted earnings guidance for 2019, basically a no-growth valuation, these blockchain moonshots are all upside for investors.