Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years
Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years by Simon Black – Sovereign Man
Yesterday morning, several banks in Australia started rolling out a new payment system they’re calling NPP, or “New Payments Platform.”
Until now, sending a domestic funds transfer in Australia from one bank to another could take several days. It was slow and cumbersome.
With NPP, payments are nearly instantaneous.
And rather than funds transfers being restricted to the banks’ normal business hours, payments via NPP can be scheduled and sent 24/7.
You can also send money via NPP to mobile phones and email addresses. So it’s a pretty robust system.
Across the world in the United States, the domestic banking system has been working on something similar.
Domestic bank transfers in the Land of the Free typically transact through an electronic network known as ACH… another slow and cumbersome platform that often takes 2-5 days to transfer funds.
It’s pretty ridiculous that it takes more than a few minutes to transfer money. It’s 2018! It’s not like these guys have to load satchels full of cash onto horse-drawn wagons and cart them across the country.
(And even if they did, I suspect the money would reach its destination faster than with ACH…)
Starting late last year, though, US banks very slowly began to roll out something called the Real-time Payment system (RTP), which is similar to what Australian banks launched yesterday.
[That said, the banks themselves acknowledge that it could take several years to fully adopt RTP and integrate the new service with their existing online banking platforms.]
And beyond the US and Australia, there are other examples of banking systems around the world joining the 21st century and making major leaps forward in their payment system technologies.
It seems pretty clear they’re all playing catch-up with cryptocurrency.
The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it’s possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.
Combined with other new technologies like Peer-to-Peer lending platforms, fundraising websites, etc., consumers are now able to perform nearly every financial transaction imaginable– deposits, loans, transfers, etc.– WITHOUT using a bank.
And it’s only getting better for consumers… which means it’s only getting worse for banks.
All of these threats from competing technologies have finally compelled the banks to innovate– literally for the FIRST TIME IN DECADES.