Strategic collaboration between banks and startups in the blockchain and cryptocurrency is in the booming phase. Incumbent banks, challenger banks, regulators, and innovators are expressing sudden curiosity to explore the potential of these emerging technologies and their use cases. Due to more widespread education, there are more people trying to implement blockchain to facilitate payment systems, supply chain management and other services across all industries. Incumbent banks have also invested in blockchain startups, such as R3 blockchain consortium to facilitate trade finance platform that simplifies paper processing tasks across the network.
However, there are still barriers that limit collaboration between incumbent banks and stratups in this space including lack of understanding, lack of tools and channels to spread education, and lagging regulatory reform. Banks are not that involved in the blockchain space yet because there is a lack of understanding and lack of people who can integrate blockchain services into corporate. The root cause of conversion between fiat currency to cryptocurrency is also due the lack of education in this space. Additionally, cryptocurrency space is at its infancy and regulators are a little bit behind innovators, which limit the speed of technology adoption. Therefore, developing more educational tools and channels can help garner a wider audience and make people more confident to get on board. For
example, targeting people that are technically capable in building services in sandboxes can be helpful. By plugging in models into these sandboxes, startups can enable people to understand more about their concepts and ideas. Educating people through sandboxes can help in bringing mass adoption and help more people understand how the technology works without regulatory boundaries.
Fintech solutions can help the unbanked gain access to financial services and start saving and investing, opening worlds of possibility to people who have previously been dismissed as low-value and high-risk by financial institutions. Fintech and open banking have the potential to disrupt traditional financial services models and better serve the masses through more transparent, engaging, tailored and accessible financial products and services that provide the same level of on-demand efficiency, seamless customer experience and data-driven personalisation as the tech giants.
Blockchain technology and cryptocurrency have massive disruptive potential and play significant role in spreading financial services to the unbanked and underbanked across the world. Previously in a centralized system run by a government or an entity, the unbanked were unable to open a bank account based on limited financial income or other restrictions. Additionally, banks are prone to getting shut down during economic crisis and there is a risk of losing everything in one’s bank account. The fundamentals of bitcoin allow people to access a digital currency, which can be compared to the internet of money, accessible by anyone who owns a computer to download a wallet. Suddenly, the unbanked can gain access to financial network and banking services on the internet without the need for permission from banks. Digital wallet allows people to operate their own bank and transfer money across borders in minutes without the need to be verified by third party or reliance on intermediaries to facilitate transactions. Although targeting the unbanked might have some challenges in accessing the internet, but it’s the first time in the history since the trading of gold or other medium of money where people can trade things without a centralized party.