Changes In Financial Services
The convenience of making financial services and financial transactions in general had been revolutionized first when telegraph companies have 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. Transferring funds by using wire transfer method through a bank isn’t a single step procedure but a multi step process. This works when the sender approaches his or her bank and ordered a 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 then contact the bank of receiver by sending a message via security system, creating signals that a transfer has 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 entire process is done bit by bit and not in one go. With this being said, the entire process may take anywhere from few hours even to couple of days for the whole sum be completely transferred.
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To be able to make the transfer, both banks should have a reciprocal account on each other. If that’s not the case, the transfer is made using a correspondent bank that’s holding such an account. As one may notice, this kind of transfer relies mostly on the mediator, taking more time than it should and also, prove to be costly since banks are charging some fee for the services they offer. But if you want an alternative to such, opting for distributed currencies is a good choice as this makes the process easier.
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What set these types of services apart from the conventional services is that, they don’t rely on central mediator rather, they are operating using cryptographic protocols. Here, the process is simpler, faster and most of all, more efficient. The system is also transparent to both users while the conventional systems used are vulnerable to fraud as a result of complex processes involved. What seems to be the drawback of such service is that, it’s quite easy to trace transactions back to every creation of the unit value.
Still, there are many people who are using distributed services and even P2P mobile transfers in which network operator help user in transferring funds simply by sending SMS.