The Future of Money – Transformation & Positive Change
When was the last time you withdrew money from an ATM?
Many of us would probably say “I don’t even remember”.
We’re observing a change in the way people relate and manage their money, and whilst things have already come a long way with fintechs presenting solutions reducing costs, it seems that digital currencies still have even more potential to improve banking and finance.
So what is the future of money and digital currencies?
Below are some insights on central banks digital currencies and the impact on the ever evolving financial and technology ecosystem.
Banks are coming up against a wall of transformation
Every day banks lose market share to Fintech. It’s death by a thousand cuts. Banks who aren’t already planning for the impact of transformational innovation have a very tough road ahead. And I believe that it’s only going to grow exponentially more competitive as companies with substantial financial resources continue to invade and disrupt the profitable business of payments. Next, cryptocurrencies with more stable characteristics are beginning to emerge and establish themselves as viable alternatives to fiat currency — money that is declared legal tender by a government.
Cryptocurrencies have moved the conversation from the notion of e-money and how it can impact global commerce to instead showing that new currencies can be created and managed as a store of value, eliminating intermediaries in the process; this is a radical change for the banking industry. Lastly, the EU Payment Services Directive (PSD2) is mandating the creation of bank APIs to allow non-bank entities such as online retailers, to initiate and complete payment transfers without the need for legacy payment networks or proprietary bank systems. In this way, regulation in the EU is leading the way for payments innovation and precipitating the erosion of payment market share away from banks in favor of innovative firms and Fintechs.
National digital currencies can bring positive change for banks
In Sweden, where the incumbent payment processors control the majority of the market, Riksbank, the world’s oldest central bank announced the intent to create a national digital currency to promote competition and further enhance the national payments system.
National digital currencies could offer operational efficiencies to banks, as well as improved user experience, along with new market opportunities through such innovations as stable coins enabling banks to issue credit and inject liquidity into new blockchain-based transactional networks, creating new revenue streams for themselves in the process. This ongoing shift could potentially reshape the competitive payments landscape.
Inspiration and extract from IMB, Digital currencies: The next paradigm shift for my money.
We believe blockchain and digital currencies have the potential to change the way people go about finance. Agree? 🙂