The prospect of billions of dollars in new deposits is one reason. But what has really piqued banks’ interest is a recognition that the future of payments is digital.
After years of expectation, blockchain-based payment systems take over a number of US Banks. Surprisingly, there were banks outside the top 10 (by inventories) that led the charge. This development offers the idea that these banks are technologically conservative. The effects of these first users focused on the tokenization of US dollar deposits to modernize B2B payments that develop slowly. Instead of a fraction of 23 billion US dollars in B2B payments made to US annually, are digital. Astonishingly, 42% of B2B transactions are still carried out with checks according to Deloitte.
Tokenization accelerates the innovation curve for B2B payments. It eliminates many of the existing limitations of slow and outdated payment rails, such as cutting times, during the night or processing and restrictions of several vacations in transaction sizes. Tokenization achieves the creation of a digitized presentation of an asset. Every dollar deposited in the institution, a token is created that represents this dollar. These tokens are supported by 1: 1 by cash deposits that never leave the bank, a feature that satisfied the bank controller. These digitized representations are supported by intelligent contracts – code that leads to each token with other intelligent contracts and digital portfolios are interoperable. The code automatically verifies the validity of the funds and allows any bank client to transmit anytime. This functionality was particularly valuable for digital asset companies, which in contrast to the main road or even Wall Street, operate 24/7/365. With this framework, Digital customers such as asset companies can immediately fund their accounts.
Changing perspectives in the C-suite
Practical considerations
What remarkable about these payment systems is that they are alive. Many blockchain ideas can not be assumed so that financing can show the same result. Even more impressive Time to market has been fast, less than a year. The difference is that these banks have approached blockchain payments with a measured roadmap. It started with basic functions, such as USD token split the simple transfer, and as soon as the critical mass has been hit and customer experience get used, it extended the functionality in a measure. What has also helped to develop these digital payment options with open API and a Data Focused model that facilitates integration with a bank basic systems. This integration enables the tokenization of the dollar of deposit accounts and the redemption of token of digital portfolios. This ensures a check and adjustment in real time with blockchain data and central bank systems.
The journey between blockchain curiosity and success for banks is much shorter than many, so they move faster than larger institutions. The most important engines have given others a clear roadmap on the development and provision of tokenized payments. Technology is available, coding is flexible and frames are adaptable. For banks, blockchain is not a buzzword. The delivery of their potential for the production of efficiency, modernization of payments and ongoing deposits. This is a combination that is increasingly difficult for each executive to ignore.
Source link
