As we stand in the year 2020, the vast difference in the usage of virtual currencies can be seen throughout the world. We have come a long way from transferring values between people with exchange system or physical commodities to sending virtual money just with a tap on our phone screen. Now, Fintech disruptions such as the virtual currency or decentralized protocols are emerging as the new pillar of financial institutions.
In 1971, when the world removed the gold standard and started depending on the floating exchange system, it was a significant revolutionary change in the finance industry. Behind the fintech disruptions, there are the fintech entrepreneurs who put more emphasis on the young, dynamic crowd, who buy and sell commodities around the globe with the digital transaction. This young group of people is more inclined to an online experience, which is pushing the fintech entrepreneurs to find new ways to transact value. The financial disruptions in the payment industry are gaining ground on the belief that transactions can be made anytime and anywhere between the sender and recipient.
Not only for getting the attention of this young crowd, but these financial disruptions also result in economic efficiency and enhance the rate of prosperity. The distributed ledger has come out as a great solution to the difficulties in cross-border payments and data transfers. It has become less time consuming, guarantees enough security and its a real money saver as well. The unnecessary red tape is no more regarded as a hassle for global consumers.
The entire idea is a solution to cope up with the speed of transaction that is thriving the payment industry today. The process needs to be frictionless as the sender these days wants to settle the deal and payment, and the recipient wants the money quicker than ever. The digital transaction of values, be it money or data, ensures a less time-consuming process without any disruption. The modern generation consumes every technology that offers immediacy and gratification. Thus, the fintech industry is looking after these aspects more.
Japan-based Soramitsu has come up with a next-generation payment network to make the most use of smartphone and transact online. Not only it offers a faster and cheaper transaction experience, but it also works a step towards a more significant problem, ‘unbanked.’ For instance, in a country like Cambodia, access to banking services in very limited. In there, 78 percent of the population does not have access to banking. But the blockchain platform by Soramitsu was able to enrol thousands of users within just six months. They were successful because their payment network ensured a direct and efficient transaction between banks and customers, which was thoroughly monitored by Cambodia’s central bank.
The main problem with the banking payment service is its legacy payment infrastructure. The legacy infrastructure of one bank does not work well with other banks. So, naturally, it fails to ensure higher customer expectations. It is all about high fees, delays and hassle in the transaction of payments. To solve this more significant issue, Soramitsu also used the most reliable solution, known as tokenization. Soramitsu’s network allows the bank to use the token transfers for direct transactions. It is regarded as one of the most efficient processes as it eliminates the time-consuming transfer instructions, liquidation etc. as a definite outcome, the process takes less time to complete.
Many countries are experimenting with QR scan codes in the transaction process for the payments denominated in local currencies. For the vast number of participants in a financial ecosystem, the divergence can cause both confusion and red tape. If every one of the participants charges a fee, it can get costly. So, the fintech entrepreneurs are working towards finding new getaways to the payment process. This is automatically resulting in higher economic activity and working as a source of wealth. The innovations of Bitcoin, tokenization or blockchain are gaining popularity among tech-savvy consumers. All of them are working as disruptive techs that are leading the big financial ecosystem to adapt to a new system of digitalization.