Mobile Banking: a Breakthrough Blockchain and Fintech Development
Mobile banking users almost doubled in five years as banks deployed a variety of technologies that allow access to financial services according to a report by Junipeer Research (1). The number of mobile phone users for banking transactions will increase from 590 million in 2013 to one billion by 2017, according, which represents about 15% of mobile users globally. The report indicates that banks have at least one mobile banking service – text message, mobile browser or an application service. Most major banks are deploying two or more technologies at the same time to take advantage of smartphones and tablets, Juniper says. Blockchain and Fintech might be the innovation that sends adoption of these technologies into the stratosphere.
Traditional Mobile banking: Risks and Disadvantages
It seems that many people do not want to take any risks when it comes to their money. 73% of consumers in the study are afraid hackers could access their phones remotely. Not only that, they are also concerned about what happens to their information if they lose their cell phone or have it stolen.
Sending money can take a long time even with mobile apps. When an individual or institution does a transaction to anywhere in the world – it is not only expensive but also slow. Anyone who wants to send a few hundred dollars is charged with fees by potentially both banks involved and must wait for up to several days. This slow, expensive system is caused by its reliance on multiple intermediaries and cumbrous old computer systems.
For many consumers, using cell phones to bank is not worth the risk, time or costs. However, mobile banking greater flexibility and convenience because of it can be done anywhere. It is therefore in the interest of banks and customers to find a way to reassure everyone that mobile banking is safe and secure.
Blockchain and Fintech: a hero for mobile banking
By eliminating the need to use an intermediary organization, blockchain increases the level of security for mobile banking. The more parties involved in a transaction, the higher the degree of risk for human error or corruption. But thanks to blockchain and fintech, transactions take place directly between two parties on a fully transparent ledger, so it is immune from human manipulation or error. When transactions are performed via blockchain, users don’t have to fear their mobile devices being hacked or stolen because even if a thief gains access they will not be able to manipulate the blockchain.
The concerns about banking speeds and costs are also addressed by blockchain. Blockchain and fintech removes fees and accelerates the pace of payments because the smart contracts and the inherent transparency of the blockchain remove the need for intermediaries. Instead of waiting several days to pay a check, a payment can be made within a few seconds. The risk and complications associated with denied payments also decrease when blockchain technologies are used. There is no “advance payment” condition because the credits and debits are instantaneous. With this increased speed, users will be even more eager to use mobile banking because all they need to do is reach into their pockets and instantly can perform a cheap transaction.
Blockchain will be used by 15% of the world’s largest banks in 2017 (2). And in the next four years, around 66% of the world’s banks will deploy blockchain on a commercial scale. The numbers show the incredible speed of the technology’s adoption.
Already we are seeing the rapid implementation of blockchain technology to power banking in general and mobile banking specifically. For example, nine of the world’s famous banks, including JPMorgan, Royal Bank of Scotland, Goldman Sachs and Barclays, are partnering with R3, a New York-based financial technology firm, to create an infrastructure based on blockchain fintech (3). In Japan, a 47 bank consortium is experimenting with ways to use the Ripple blockchain for a cloud-based payments platform called RC Cloud (4). And last year “the first cross-border transaction between banks using multiple blockchain applications has taken place, Commonwealth Bank of Australia and Wells Fargo & Co said on Monday, resulting in a shipment of cotton to China from the United States,” according to Reuters (5).
The World’s Large Banks are Taking Notice of Blockchain