We are going to start from where you already know. The banking industry is undergoing an evolution, from physical to digital operations. Gen Zers is at the heart of this transformation.
Unlike traditional services, digital banking is faster and access to accounts easier across the globe. This is emerging as the new norm. For example, you can use mobile banking to do the following:
- Account transfers.
- Balance management.
- Touch payments.
- Loan applications.
Although better than the physical model, mobile banking is still far from being 100% digital. It is also not fair, and a more advanced solution is needed.
Understanding the Banking Problems
The truth about traditional banking services is that they are costly and slow. Traditional banking presents a contrast to what is happening around us because many devices and technology of yesteryears are changing. For example, we see new smartphones and computers, which are better and more efficient every other day. But the banking services have lagged behind, and one is left to wonder, “Why?” Is the industry standing on the way to progress deliberately?
This point at the fees charged by banks
If you look at the traditional banks, they are run as for-profit organizations. They are designed to take advantage of clients by making money from them. So, if you have an account in a bank, it is likely to earn you some interest, right? However, the annual interest is likely to be low, about 0.5%-2%. But they charge very high-interest rates for lending money to clients. Check the average global rates for different rates for various services:
- Mortgage Lending Interest Rates = 2.98%
- Student Lending Interest Rate = 4.5–7.3%
- Credit Card Lending Interest Rate 16.15%
Interestingly, banks do not see any problem with these numbers. This is so because clients do not ask questions and always go with the numbers on loan agreements. The banks want to take more and give out very little.
Blockchain is Changing the Future of Banking: Why?
You have probably heard or used blockchain technology and have an idea of how it is transforming the globe. For people new to blockchain technology, it can be pretty challenging to understand. However, banks will not want you to understand about it because it simplifies the access to banking services and cuts the cost by a huge margin, facts that could easily push them out of business.
- New Blockchain Technology Brings A lot of Benefits
Blockchain has the potential to assist people worldwide by making it possible to run millions of transactions every day. People using blockchain networks to send money are able to complete transactions at lightning speed. For example, payment transactions can be completed in seconds, not hours or days. Again, the transactions are cheap, and you can say goodbye to:
- Processing Fees
- ATM Fees
- Account Fees
- Waiting for lengthy periods when sending money
- Forex Currency Fees
- Global Transfers are Powered by Computing
When using blockchain technology, banking services are cheaper, faster, and global. They work like social media messaging apps, which allow users to communicate in real-time no matter the time and geological differences.
This concept is replicated in finances, meaning that no middle-person or banking authority is required. Instead, they rely on computing power which makes them more efficient and secure.
- Blockchain is Less Complicated Compared to Traditional Banking
Unlike traditional bank transactions where a long list of officers or parties has to be involved, everything is automated in blockchain networks. If you want to send $50, the money is deducted from your account and added to the recipient. Then, the details are added to the next block that is embedded into the blockchain. No middle person is required.
Conclusion: The Future of Finance is Blockchain and Awesome
The banking system is full of challenges and significantly limits those who can join because of rules, banking regulations, and location. Therefore, a lot of people go without banking accounts, credit cards, or debit cards. But everybody should be provided with equal opportunities. Banking is vital, but banks are not.
hi.com offers an excellent solution right on your phone running a not-for-profit model.
For anyone who supports the idea that banks have gotten away with terrible rates and unnecessarily punitive rules, hi might be an excellent option.