European Banks Receive Instant Payments Plan to Stave Off Libra Takeover
Finance industry officials have hinted toward the development of a real-time payments system with instant settlement to be used by banks across the Eurozone. Traditional financial systems have come under pressure from cryptocurrencies and, more recently, Facebook’s new digital currency, as reported by Reuters, June 26, 2019.
Battle for Supremacy
Instantly settled payments have existed in the Eurozone since 2017, with only half of the banks in the region implementing the system. Despite this, it has not eroded the utility of cryptocurrencies as they are majorly used to transact domestically.
Banks have slowed down product upgrades as the financial system was essentially an oligopoly run by a cartel of large banks. With Facebook now on their tail, banks are seeing the need for continued innovation and service upgrades, a response that comes in fear of losing a major chunk of the payment remittance market. Major banks across Europe such as Santander, Deutsche Bank, and SocGen are leading the charge to protect their dominance over transactions.
Regardless of Facebook’s success, their advent into the payments market shows the potential of big tech to disrupt banking and create better services at a cheaper process cost. Their ability to create networks to connect different ends of the world is their key advantage, allowing them to create global solutions that improve financial inclusion and make transacting easier.
By 2020, all banks operating the Euro bloc are expected to implement real-time payments. Failing to do so would lead to sub-optimal customer experiences and a decrease in the bank’s market share.
Banks and governments have been trying their level best to resist the change brought about by digital currencies, having successfully done so until the 2017 bull run. Facebook’s entry into payments wasn’t shocking, yet it caused a wave of uncertainty amongst regulators with the US demanding they halt product rollout until Congress has reviewed it in detail, in addition, emerging nations like India and Russia are taking an autocratic stance to outright block it.
At this point, resistance is futile as the change is already upon us. Countries that are unable to grasp the utility and future potential of cryptocurrencies will stagnate whereas the other countries with innovation-friendly legislation and rules will massively benefit.