• Petr Kozyakov, Co-Founder and Chief Business Development Officer at Mercuryo Word count-936


• 18.11.2021 02:15 pm
#Crypto #Could #Currencies

Financial technology has exploded over the past decade. We’ve seen the rapid rise of peer to peer payments, open banking and new payment technologies in-person and online.  This digital transformation isn’t new exactly but the global pandemic proved to be a major accelerant of these services, fuelling widespread adoption of financial technologies at a time when consumers were unable to get to their local bank branch or physically visit shops.  Consumers benefit from a greater choice of products and services because they can be bought remotely, regardless of location, and in turn fintech companies are able to collect and store more information on customers so they may be able to offer more personalised products or services.

But despite this technology improving the distribution of financial services, there are still many archaic issues yet to really be resolved. When it comes to sending money overseas for example, the banking sector is desperately behind the times. Companies have to deal with high processing costs, lack of transparency, and a long chain of intermediaries involved in the funds transferring process from tricky onboarding and meeting all of the necessary legal requirements. Not to mention isolating the 1.7bn (31%) of the population who remain unbanked.

Fintech businesses have disrupted the traditional legacy banking ecosystem. Whilst traditional banks rely on hooking customers into an entire ecosystem of services and products, fintechs narrow their focus towards doing the small things well. From payments to lending and wealth management, these industries are winning over customers by tapping on unmet customer needs and providing better, faster and more targeted financial services.

Financial services, in turn, are becoming a number-one focus for all kinds of companies, and fintech is destined to benefit various businesses. Access to fast, cheap and efficient services is fintechs’s primary objective but the path isn’t simple.  All the fintech startups, sooner or later, run into one major issue. Ultimately the necessity to integrate into the banking infrastructure remains unavoidable. Regulatory and structural considerations mean that fintech companies still depend on traditional banks for key functions. And it’s this infrastructure, a crucial part of any financial system, which is severely underdeveloped. 

For example, when sending a money transfer overseas,  the necessity to integrate SEPA and Swift transfers into your final product remains essential. Due to the complex processing requirements and the  long chain of intermediaries involved in the funds transferring process, delays are common with payments overseas taking an average of 5-10 days to arrive. 

But there is another way. A decentralised crypto-powered environment can completely bypass this chain, speeding up payments and reducing costs,  whilst minimising third party risks and providing  full transparency.  Determined to make cross-border money transfers immediate and universally accessible, Mercuryo enables using cryptocurrency to improve international and local remittances via a straightforward service that allows sending funds instantly. 

However, the banking sector doesn’t have to be left out entirely and the greatest threat to banks is stagnation, rather than the perceived threat of challenger technology. Whilst DeFi could indeed rival traditional banking, it also provides huge opportunity for innovation through collaboration. Fintech and crypto-powered products can be integrated into banking systems, bringing their services up to date. Mercuryo’s fintech crypto SAAS solution, for instance, works just like that. By leveraging the product, banks can enable customers to buy cryptocurrency using their fiat bank accounts. At the same time, the bank doesn’t need to hold any crypto as customers receive their coins via a third-party wallet. Mercuryo ensures custody of cryptocurrency and confirms the balance info with the bank. 

DeFi is already disrupting markets like lending, borrowing, trading, insurance, and many other financial services. Implementing crypto for cross border could provide stability for SMEs; reducing cost, providing more flexibility and traceability and improving the speed of their international payments and as more blockchain, crypto, and fintech projects start collaborating, the transformation will accelerate.  Safe data storage, fast and cheap cross-border transactions, advanced digital identity verification, and universally accessible banking services will soon become a new reality. Blockchain has the potential to improve a wide range of business processes and benefit any industry with alternative solutions that can blend into the current finance scene smoothly. 

Despite all the advantages that DeFi can bring, there are still some practical barriers to penetrating the mainstream. Since major banks are huge institutions with a lot of inertia, it will take quite some time for them to decide whether to adopt crypto and launch their digital asset solutions. Plus more regulation is needed to combat misgivings of risk and fraud. The space is crying out for more collaboration and providing solid education around the benefits will mean a huge leap forward for financial services.