Changes In Financial Services
The convenience of making financial services and financial transactions in general had gone through huge evolution from the time when first telegraph companies introduced wire transfers. On the other hand, with the coming new era of financial services, it is time that we start to address questions of what would be the future of financial services?
Let us begin this topic first by seeing how things have gone so far for the last 100 years since the time when wire transfers were publicly introduced. Believe it or not, transferring funds through wire transfer method on a bank is not a single step process but a multi step procedure. It works like this, the sender approaches his or her bank and will order the fund transfer to an account. Unique codes will be provided to the bank by the sender to let the bank exactly know where the fund has to be transferred.
The bank of the sender will be contacting the bank of receiver by means of sending a message via security system, creating signals that a transfer is ought to be made. The receiver’s bank would receive the message plus the instructions for settlement and then, ask the bank of sender to transfer specific amount in the message. Now, the bank of sender can proceed on transferring the amount. This is not done in just one go but bit by bit. Having said that, the whole process could take anywhere from few hours to two days for the whole sum be completely transferred.
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Both banks should have a reciprocal account on each other to be able to make the transfer. If that’s not the case, the transfer is made using a correspondent bank that’s holding such an account. If you would notice, this type of transfers are relying heavily on mediator, taking more time than it should and also, prove to be costly mainly because banks charge some fee for the services offered. But distributed currencies provide viable alternative in making this process easier.
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What set these kinds of services apart from conventional services is, they are not relying on central mediator instead, they operate using cryptographic protocols. Here, the process is way simpler, faster and most of all, more efficient. The system is transparent as well to both users while traditional systems used are more vulnerable to fraud because of complex processes involved. The fact that it is easy to trace transactions back to every creation of the unit value is what appears to be the drawback for this service.
Still, there are increasing number of individuals who use distributed services and even peer-to-peer mobile transfers to which a network operator help user in transferring funds simply by sending SMS.