WORLDWIDE TRANSFER OF MONEY NEEDS A NEW REVOLUTION!
The 4th Industrial Revolution has brought innovative, breakthrough technologies such as cloud technology, big data analysis, biometrics, Artificial Intelligence, BlockChain technology, … and especially making profound changes in banking and financial services.
When the transfer tradition is becoming obsolete
According to World Bank ‘s estimates , in 2018 the amount of remittances has gone to developing countries with low and middle income that are growing at 3.5% to 466 billion USD, in 2019 global remittances are expected to increase 3.4% to 616 billion USD. These figures show the importance of remittances for middle and low income countries - capital flows contribute significantly to developing countries' GDP and account for 75% of the total global remittances.
To maintain and develop remittances, there are two main methods for international money transfer: from bank accounts to bank accounts and through personal money transfer channels ... Both of these options are There is limited time to process and high costs due to many intermediary fee collection activities.
Having too many intermediaries involved in global money transfer acts as a fee collector, with an expensive fee that consumers are forced to pay without receiving any real value.
Besides, 70% of the population in rural areas, accounting for 72% of the labor force, is difficult to access financial services. And transactions of small value such as about VND 30,000 have not had any real saving solutions.
The money transfer world needs a new revolution.
Facing consumer behavior with significant changes and strong application of digital technology in all aspects of socio-economic life, many banks and financial companies have re-evaluated the old business model. , implementing digital transformation to build digital banks that are well adapted to the new context and sustainable development in the future.
In this situation, blockchain technology is considered one of the market solutions. Blockchain is a hierarchical database that stores information in information blocks that are linked by encryption and expand over time. Each information block contains information about the initialization time and is linked to the previous block, with a time code and transaction data. Blockchain is designed to resist data change: Once the data is accepted by the network, there is no way to change it.
First, thanks to decentralized storage of transaction data and the changing of information about transaction history almost impossible, customers can be assured that what is stored by blockchain is worth it. trust. Secondly, with the blockchain, investors have equal control of the ledger, so it will ensure transaction accuracy. Finally, this technology allows money to be exchanged quickly, regardless of whether it is day or night, which helps to save money and still be highly effective.
In addition, blockchain helps a lot in preventing money laundering or non-transparent transactions because all traces of transactions can be stored on the blockchain and never changed.
Challenges & solutions.
At the moment, Blockchain is one of the most concerned technology solutions to solve some problems in the banking industry and the payment field. However, to fully apply, banks and financial companies still face many challenges.
First, the challenge of legal regulations:
One problem for Blockchain technology is the uncertainty about regulations. There are currently no standards or a central organization that monitors / manages Blockchain technology applications. Therefore, it is necessary to have some form of management for this method of technology. The development of rules, standards and treaties related to Blockchain technology approved by countries and international organizations will take time and cooperation of many stakeholders.
Second, the challenge of securing confidentiality:
The open electronic ledger system will make customer data security more difficult. Although this can be dealt with somewhat for Private Blockchain with complex encryption, there are still some concerns about network security that need to be addressed.
Third, challenges to integrating Blockchain technology platform with existing systems:
Blockchain technology developers have not yet solved how to let Blockchain technologies integrate not only with the current banking and payment systems but also to connect with each other. To solve this problem, cooperation and agreement between different stakeholders is required and will take a long time.
The faster you grasp and apply blockchain, investors, banks and financial companies will have the advantage of price and security technology. However, for application and operation, it takes time and capital to deploy as any other technology. In addition to the powerful computer system requirements to verify and store transactions, overcome customer prejudices with virtual money or adapt to changes in the legal system, businesses and Investors also need to build an IT team that is knowledgeable and experienced in working with virtual money and blockchain.
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