How will banks move money as fast as the Internet moves information? Apifiny CEO Haohan Xu explains how blockchain technology will save the day in this Banking Dive Op-Ed.
In an opinion piece, “Blockchain Technology Will Remove Barriers to Instant International Settlement,” Haohan discusses how participants on a next-generation network, such as Apifiny’s Roxe, can transact and have the transaction visible and settled between parties in minutes or even seconds instead of days.
“Barriers are springing up everywhere for remittance companies and banks,” he writes. “Overcoming obstacles to cross-border payments is especially daunting right now, with slow settlement times, high fees and fresh competition bringing new challenges.”
Article highlights include:
- Banks are projected to see a global drop of 20% in remittances in 2020, due to the coronavirus financial crisis. This means banks are losing business across a number of sectors, from seasonal workers to diplomats.
- A coronavirus vaccine alone won’t cure the revenue loss. International workers expect improvements in the form of lower fees and shorter settlement times, or they will begin seriously exploring new alternatives for making cross border payments.
- The fact that banks and payments companies face two key international remittance roadblocks. There is no global network—the far-reaching SWIFT is a messaging system and not a true banking network. Meanwhile, outdated technology is prevalent, making banks subject to lengthy and expensive upgrade projects for modernizing their payment platforms.
- The opportunity for banks to revitalize remittances with fresh applications of blockchain technology, in the same way that DTCC’s Project Ion and Project Whitney are testing blockchain to improve settlement for securities.
- How the latest blockchain technology can create a network like Roxe that goes beyond simply being a messaging service, like SWIFT is, to one that optimizes transactions using smart contracts to fulfill the settlement lifecycle.
- The increased speed, transparency, efficiency, and cost savings of a blockchain-based approach to transforming global settlement.