The concept of taking security over digital assets, particularly digital currencies, is still in its early stages, and it is further complicated by conflicting case law and different treatment of various types of digital assets. If we gain clarity in these areas and eventually feel confident that security can be taken and perfected, the market could experience a significant shift. Organisations are becoming more sophisticated in terms of the services they provide to cryptocurrency holders.
Challenging the Legacy Of Traditional Banks
Indeed, the financial legacy and way of doing business have become so stagnant that the needs of banks and the needs of customers almost no longer lineup – especially on a daily basis. Customers have been clamouring for a fresh start, but cryptocurrencies and blockchain could be an entirely new system in comparison.
Some bigger organisations have successfully developed their own technology to solve this. Most of these organisations have labelled themselves as challenger banks, but you can only truly disrupt if you have a current account – which people use every day – and your own technology. This is not necessarily referring to blockchain technology; however, blockchain is a prime example of disruptive technology for the banking sector.
Changing The Future Of Banking
For nearly a century, the banking world has continued in much the same way, with little to no threat from alternatives and this is gradually changing. People would like to believe that the power of blockchain in the financial system, as well as the availability of cryptocurrencies, is about to shake up the entire banking industry, but they would be mistaken.
There is little doubt that financial institutions will start to integrate certain blockchain aspects to banking, so probably for trade finance where you have lots of parties partnering on a transaction, but there will be blockchain implementation in specific market areas of the business, you won’t see it as a wholesale change for the banking platform. However, it would be unwise for an entire, legacy-based industry of such traditional magnitude to overhaul its entire system for a newly formed technology.
Having said that, cryptocurrencies will begin to gain wider acceptance. This is not to say that these two sides of the same industry will be the ones to change the face of banking. Still, the face of banking is changing, and traditional banks that are unaware of this are beginning to show gaps. Everyday money and payment usage is already on the rise, and as a result of customer demand, an emerging market of challenger banks, app-banks, financial institutions, and payment facilitators are on the rise.
Some are already providing blockchain and crypto services, and others may do so in the future, but claiming that blockchain and crypto are the only way to the future of banking is short-sighted as there are much larger demands and many more market segments to be filled.
We may be on the verge of a dramatic shift, and the financial industry must prepare for a permanent overhaul – how quickly that overhaul occurs is debatable. The governance of central banks, the resilience of our privacy laws, and the fundamental principles governing the ownership of digital assets will all need to be reviewed. With OpenPayd’s technology, you can now find banking partners for crypto companies and stay in trend!