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Get ready: the near future of banking is all-digital currencies

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The future of money is near

Imagine shopping on the Internet for a new fridge. A couple of minutes into your search, you get a pop-up message from your bank offering credit, as well as arranging delivery of the fridge? Better yet, you get an option to pay in a digital currency.

The future of secure, personalised banking is closer than we think and brick-and-mortar banking as we know it is about to change forever…

Customers today demand online services on smart phones and devices and drive the demand for digital in the banking industry. Banks, in turn, want to move out of traditional brick-and-mortar operating models and create more efficiencies, reduce costs and improve the customer’s experience.

Are banks keeping up with the pace of change?

Banks are already making a digital shift in their operating models and looking at automation to replace fairly mundane people-based processes. For example, Robotics Process Automation is used to enable clients to open new accounts online by essentially automating and digitising all the back-office functions that ensure transactions have been processed properly.

More banks are also opting for hybrid IT models to leverage platforms and as-a-service models and they increasingly consume cloud services and solutions (potentially in a full business process outsourcing configuration). However, to ensure data sovereignty and satisfy local legislative demands, applications and the back-office systems need to run in an on-premise environment.

Watch the First Choice Global video to see how this Kenyan fintech start-up is reinventing the international money transfer industry while meeting local legislation requirements.

You can learn more about the First Choice Global story by visiting this web page.

Banks need to change or miss the revolution

 Over the last 30 years the ‘Internet of information’ enabled us to exchange information globally based on the emergence of standards and protocols like TCP/IP. The standards have helped develop organisations like Amazon, Google and Facebook and it has changed the way people buy and consume products.

Today, there’s a major revolution in the digital banking realm and there’s a shift towards ‘Internet of banking’ and how to exchange value. A system like blockchain is helping customers to break away from legacy payment systems and models.

Blockchain allows customers to exchange the value of goods, items or services with bitcoins – the world’s first decentralised digital currency. This means customers can use bitcoins to exchange value without intermediaries, enabling greater control of their own funds and lowering banking fees.

In the near future, blockchain will be built into banking models to provide value for clients and bring new experiences. Today’s non-real time monetary systems, for example to exchange money, are cumbersome and slow. By incorporating blockchain into the banking model, currencies will interoperate more seamlessly, in real-time, and at a lower cost.

Action today: Hybrid IT is a stepping stone to unlock new models

For banks to seamlessly utilise blockchain, a standard like TCP/IP is required. Dimension Data’s parent company, NTT, is currently working with a consortium of players on an Interledger Protocol (ILP), which will allow traditional and digital payment systems to seamlessly interoperate.

Dimension Data is working with NTT on use cases with customers to create proof of concepts for ILP. From our work with NTT, we realise the importance for banking institutions to unlock the value of their hybrid IT environments – today.

Download our strategy briefing ‘Success factors for managing hybrid IT’ here.

Banks will only be able to leverage the blockchain model and ILP if they operate in a hybrid IT environment with the ability to provide personalised online customer experiences. Without the building blocks in place, banks’ reality will remain a traditional brick-and-mortar model, while customers increasingly live, work, play, and transact in a digital world.

Previous Article: Organisations continue to fight the good fight against cybercrime but how are they faring? Next Article: Customer Experience: The Uncomfortable Truth

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