Unequivocally, when the UPI systems and payment apps like PayTm and Venmo came, it completely took the market upside down. For example, the catchphrase of PayTm as interpreted in Hindi, “PayTm Karo” or “Use PayTm” to experience a hassle-free transaction experience or bypassing the need for keeping change or avoid any occurrences of discomfort due to inability of having enough change with themselves. These developments ideally shaped the financial services.
However, these solutions catered to domestic innovation of financial services; the International Financial Services were still living in the age of stones. For example, as per a report, overcoming increased dependency on traditional settlement systems can be both slow and poisonous when the systems are archaic and irrelevant as per the changing trends. To put that into perspective, 40% of the businesses experience considerable delays in operations because they use old traditional ways of payments. The outcome: delay in procurement of goods and an underperforming supplychain network. The need of the hour is to have instantaneous settlements at a click of a button but with economic angle attached.
Enter: Digital Assets
What are Digital Assets?
Anything that has value, ownership and usage rights should be categorized as a digital asset. These assets are easy to exchange, and they are convenient to carry as well.
How These Digital Assets Can Transform Financial Services?
Overcome Legacy Systems
Staying in 2024 and using a technology that was developed in 1973 isn’t going to contribute to a faster development. Some of the examples and reports that we have seen above specifically justify that. The need of the hour is to abstract those legacy systems and bring their innovative counterparts. In this regard, the blockchain technology has come of age to be safe, secure, and easily accessible. For example, CiTi Bank is launching CiTi Token Service, which shall convert the amount in the customer’s account into digital tokens, which customers/users can quickly remit to their destination at a fraction of a cost they would otherwise incur while transferring fiat. CiTi Bank is embracing this innovation to cater to the demands of its customers who are looking for faster payments and high interest on their checking accounts.
Overcoming the Transparency Challenge
In the traditional financial services, like SWIFT, the sender bank sends the payment; however, there might be challenges at the receiver’s bank. Such a problem might either delay the process or exacerbate the same in the form of funds getting forfeited or higher charges levied on such transfers. The inclusion of digital assets like crypto takes away all the guessing. Why? The network prior to the transaction would inform you about the charges that will be levied.
There will be nothing shady and you can initiate transactions in a truly decentralized and transparent manner on-chain. As such, the users who are using financial services that are developed using these technologies are benefiting at large. For example, an individual could transfer over millions in BTC with as low as 10$ fees, which is simply unprecedented. However, when it comes to the traditional systems, you need to pay an n-%-age of the value of the transactions, which can become even higher when some hidden charges are included as mentioned below.
At the Cross Road of Innovations; But Regulations Mandated
Categorically we have seen that technologies have created euphoria like the early telephones; however, over the period, they became irrelevant. Likewise, for digital assets. In the initial stage, they have been promising but regulations are necessary nonetheless while making them mainstream. So, financial service industry should be eager to evoke transparency, accessibility and security guaranteed by digital assets, but they should also duly acknowledge the fact nonetheless that crypto has been a wild west and subsequent mandates and improvements can help the industry mature when constructive steps are taken towards improving its functionalities which have been proposed under MiCA and other Financial Digital Assets Services Bill passed across the world.
VE3 plays a crucial role by offering expertise to ensure compliance, enhance security, and promote the seamless integration of digital asset into the mainstream financial ecosystem. Read more such insights or get in touch with us today!
