Innovation a Must for Banks Amid Cryptocurrency Craze
Banks are now having to play catch up as the cryptocurrency craze has generated more innovation in the last 10 years than banks have in the last several decades. Major financial institutions have many advantages in the developing rat race, but nimblessness isn’t one of them.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
The Fight Is On
Cryptocurrencies are often billed as “bank killers,” and for good reason: they can permissionlessly and nearly instantaneously transact value, a feat that was once inconceivable.
But if banks and institutions really start putting their weight into the fight, they could be “crypto killers” in extreme, though not impossible, scenarios.
One of these scenarios is banks innovating to a level of parity, or superiority, over top cryptocurrencies’ current performance specs. In such a situation, these banks could be able to penetrate their innovations into the mainstream first, thereby intercepting the promise of decentralized cryptocurrencies.
And that’s precisely what many are working toward right now, albeit steadily as ever.
New Systems in the Works
In America, the current banking infrastructure — commonly known as ACH — typically facilitates transactions within five days. Not bad for the 1980s, but it feels a bit ancient compared to cryptocurrencies in the 21st century.
And banks know that. Which is why new systems are being developed all the while.
In America, there’s the Real-Time Payment system (RTP). In Australia, the New Payments Platform (NPP). These are just two of several examples where nations are moving toward near instantaneous, 24/7 banking transactions unhindered by the infrastructures of yore.
And that means serious mainstream competition for top payment cryptocurrencies like bitcoin and ripple.
William S. Demchak — the CEO of The Clearing House, the group behind RTP — recently said:
“At a time when our clients are asking for the ability to conduct their business with greater speed, efficiency and security, RTP will make everyday financial tasks such as paying bills, issuing invoices, making payroll or settling insurance claims faster, safer and more satisfying for businesses and consumers across the country.”
So cryptocurrency enthusiasts shouldn’t freak just yet. Though, in a speculative sense, it’s always foolish to completely ignore the competition.
But it’s taken four decades for the banking sector to wake up. They’ll have to keep contending with the feisty, underdog cryptocurrency start ups that are fighting for nothing short of a revolution — rapidly, at that.
What’s your take? Do you think the banks are fighting a losing battle, or do they still have a fighting chance? Sound off in the comments below.
Images via Payments Cards & Mobile, CNBC