In the digital age, the world of money transfer and banking has changed little, while entire industries around them have either been transformed, or have crumbled.
Nadine Hoffmann, Global Head of Payments, SAP SE and Raimund Gross, Innovation Manager & Futurist, SAP rightly suggests that “Blockchain is the next frontier for banking”.
The blockchain functions as a ledger of all information pertaining to a digital transaction. The system is similar to bitcoins but for financial organizations, blockchain has the ability to harness that information faster, lowering costs, and offering a greater insight into market moves with increased transparency and compliance.
2015 was a great year for funding of blockchain-related start-ups. The investment rose from $298 million in 2014 to almost $460 million.
Banks are always looking to simplify their operations. Whether it’s obtaining simplified faxing solutions like those offered by Nextiva or choosing Atos for operational efficiency, effective software solutions and new technologies always help to simplify the overall operations.
Banking groups like Citigroup, Barclays, and UBS Bank, are finding out ways to use blockchain technology for cross-border payments and they are also planning it to integrate it into their existing systems.
Chris Larsen, chief executive of Ripple, said that the technology could give banks a 33 percent reduction in their operating costs during this process. He said that this technology could allow banks to move money “in seconds”.
A great point to note here is that, a blockchain is not a currency at all. Rather, it is a system for validating, clearing, settling, tracking and recording the ownership of assets as they are traded.
The time is ripe to replace the real-time gross settlement (RTGS) systems, which were developed in the 1990s to make big transfers between banks, with something more efficient.