The banking system has been, and is still a very vital part of the global system and is considered a prominent system in the Fintech sector, due to its importance and contributions.
Banks didn’t just sprout up today, as they have been in existence for a very long time now, serving as the backbone of every economy as it helps facilitate every transactional activity in a system, which is what keeps an economy strong.
The benefits and contributions which the banking system has made cannot be overlooked and unlike other systems which have gone extinct, the banking system still remains relevant till date.
Unfortunately, irrespective of its contributions and relevance to the global economy, the presence of inefficiencies in the system, is threatening the existence of the banking system and is rapidly ruling it out from the list of most valued and preferred systems in the Fintech sector.
For better understanding, let’s look closely at some of these challenges that have impaired the banking system, rendering it irrelevant in the global financial system.
Imparities Of The Banking System
- Slow Seed Of Transactions
The different banks in today’s world lack upgraded tools and equipment with which it can process the transactions of users.
This makes them perform transactional activities at a very slow speed, since they still make use of manual workers and unrefined technologies in the execution of operations.
- Increased Wait Time
This issue comes as a result of the slow speed of transaction, because the users are made to wait for too long, for their transactions to be executed, majority of which ends up being unsuccessful, after the long wait.Imagine the frustration which it brings to users.
Imagine a user who wishes to make on the spot transactions, probably a payment for an item bought, using the banking system, and due to the inefficiency of the system, he is made to wait for an unnecessarily long time before the other party confirms the receipt of the payment. This challenge makes it difficult for the banking system to be used for point of sale payments, at any point in time.
- Exorbitant Transaction Charges
One of the most disturbing challenges of the banking system today, is the ridiculously high charges that the users are left to pay for every transaction carried out.
The high charge per transaction makes it unsuitable to be used as a method of payment, especially for those into different businesses, who execute multiple transactions in one day.
- Cross-Border Restrictions
The payment with the fiat currency, that is facilitated by the banks, is often restricted, as they are only feasible within the four walls of a nation.
There are no provisions made for payments across a nation’s border, making it difficult to be used for international businesses or transactions.
- Absence Of Transparency
The banks today, as centralized systems, lack transparency as users have no idea on how their funds are secured or how payments are executed.
Tracking payments made by bank users is very difficult and this brings about the absence of trust in a system and makes a system prone to attacks or fraud.
All these is taking the banks out of the game in the finacial sector, as it is making them unproductive and hence, irrelevant.
But, there is still hope for the Blockchain, the Algorand Blockchain brings hope.
Advantages Of Algorand Blockchain To The Banking Industry
First off, before we get to look at ALGORAND’S benefits to the banking system, it is paramount that we get a clear insight on the Algorand Blockchain.
What Is Algorand Blockchain?
The Algorand Blockchain is an advanced technology that has been created by the Algorand foundation and Algorand Inc., as a unique technology designed to be decentralized, open-source and permissionless, operating with a Pure Proof-of-Stake (PPOS) consensus, to facilitate seamless, trustless and unrestricted payments, with little or no cost and at a swift pace.
The following are its benefits and how it will enhance the better performance of the banking system.
- As an open-source and a permissionless Blockchain, the Algorand Blockchain is inclusive to all, as it does not require permission to be used by anyone.
This means that in the financial sector and every other system, it could be adopted and built on, by any user, without any form of restriction.
So, to the banks which leverage the Algorand Blockchain, it will become less tedious for anyone to set up an account and begin banking with ease.
- Algorand sophisticated technology possesses the capability of processing any amount of transaction, within the twinkle of an eye.
This feature is called a high transaction throughput, and in the hands of the banks, their performance will improve greatly, as they will become able to execute different transactions at the same time, without breaking down and at a very swift pace.
Users of the banking system will no longer have difficulties making point of sale payments, or transferring funds, because it is processed almost immediately.
- This great speed of processing a transaction will subsequently reduce the wait time for the users, as there will be no need to wait for long, trying to confirm a transaction, since the Algorand Blockchain executes this immediately.
Intriguing isn’t it?
- The use of the Algorand Blockchain in processing transactions in banks and other financial institutions, makes it more affordable for users, since it removes the need for intermediaries, which initially made the bank charges to be high.
So, numerous payments can be made by the users at a very low cost of transaction, once banks adopt the Algorand Blockchain.
Not only will this reduce the cost of operations, but will also guarantee accuracy, as the Algorand Blockchain is sophisticated and advanced than the regular technologies.
- Borderless and unrestricted payments will become a possibility in banks, with the Algorand Blockchain.
With its advanced technology and design, it is able to facilitate the movement of funds, between different borders, at an incredible speed, and at a very low cost.
Now with this, the banks have nothing standing in their way, when it comes to international transactions, as it has been simplified by the Algorand system.
- Algorand Blockchain will also help banks to maintain total lucidity of their activities and helps guarantee more security on its system.
Unlike the regular banking system, the Algorand Blockchain facilitates the easy tracking of payments made, as all the information is public and viewable for users on the Blockchain.
The fact that the Blockchain is immutable makes it even better and more secure, as it could be used to record every user data and account related documents, without recording a scandal of hacks or break ins, where user’s data gets stolen.
Security can now be achieved by banks, through the adoption of the Alogrand Blockchain.
The financial system, such as the bank, can become partakers of the revolution that will be driven by the Algorand Blockchain.
It will place the banks and other systems which adopt it, at the top of the chain in the Fintech industry and the financial sector, as it makes them more efficient and better their operations.
Find out more about how Algorand is advancing the banking sector here: https://algorand.com/