Fuse’s CEO and founder, Mark Smargon, describes how Web3 will change payments and get over existing financial constraints. We learn about the concept of banking and payments in a new way thanks to the metaverse news.
Since the COVID-19 outbreak, the use of mobile banking has surged. According to Fact. latest Mr’s estimate, the global demand for mobile payments will approach $590 billion between 2022 and 2032, with an annual growth rate of 30%.
These numbers and the expansion of mobile banking have created several opportunities for financial institutions, but they also present several hurdles. The convenience of mobile banking contrasts with the friction of transactions because it relies on inactive traditional banking infrastructure and channels.
Mobile banking problems
The fact that mobile banking is only accessible during business hours can restrict transactions outside of these hours. Mobile banking is frequently restricted to certain countries, which can be problematic if you need to access your accounts or conduct transactions while traveling or living abroad. Also, international mobile banking can incur significant expenses.
In addition, numerous financial services employ intermediates and middlemen for transactions and settlements. The storage of sensitive data in centralized databases that are susceptible to breaches, identity theft, and other hazards has been caused by an over reliance on siloed technology. Providers of centralized payment services lack openness and inclusion.
Despite the widespread availability of mobile banking infrastructure, a large percentage of the global population remains woefully underbanked and unbanked, increasing the downsides. This forces underbanked communities to utilize costly financial services, such as remittances, instead of the existing financial infrastructure. Mobile banking is out of reach for disadvantaged individuals, even though anyone with a phone should be able to use it.
Mobile banking has advantages and drawbacks. Blockchain technology, notably Web 3.0 payment services, can alleviate these limitations by providing quicker, faster, and less expensive mobile banking services that are internationally accessible and do not rely on several intermediaries analyzing counter-party credit risk.
Technology has enormous potential, particularly in the financial services sector. Web3 decentralization permits businesses to test previously inconceivable business concepts. It supports intermediary-transforming innovation.
In a normal banking paradigm, banks, correspondent banks, credit card companies, underwriters, insurers, and payment processors are involved in financial transactions. Financial system friction can be caused by intermediaries through fees, delays, and other difficulties. Simple transfers, which should settle in minutes, necessitate duplicate verifications and approvals, which wastes time and raises consumer prices and commissions.
Web3 payment solutions minimize expenses and eliminate time-consuming redundancies. A decentralized computer network manages security and transaction verification, thereby reducing transaction costs and accelerating settlements. Because Web3 transactions are secured, users may be assured that their personal information will not be sold without their consent.
Rise of mobile banking
To accommodate consumer demand for mobile banking and other digital financial services, existing systems must be modified. To keep up with shifting customer preferences, mobile banking, and other digital financial services must be accessible 24 hours a day, seven days a week, with minimal friction and near-instantaneous processing.
Traditional payment systems were designed for brick-and-mortar trade before the widespread adoption of the internet. As the internet has expanded, traditional payment systems have been upgraded for online use, but centralized infrastructure remains.
Payment layer stacks based on blockchain technology are designed for global internet use. Web3 payment services may modify the banking and payment infrastructure, but intermediaries may continue to be required, particularly in industries requiring regulatory monitoring and compliance. The adaptability of intermediaries to emerging technologies such as blockchain is possible.
The Web3 ecosystem intends to demonstrate to the world user-centric solutions such as Web3 payment services. Unfortunately, the existing payment infrastructure is ill-equipped to accommodate emerging technologies and consumer needs. As customer tastes evolve, Web3 payments are a natural progression for the payments industry.
Content Source: fintechmagazine.com
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