Payments
but also for blockchain as a technology. Taken as a whole, the entire cryptocurrency market reached highs of $1trn in 2021 and, despite a severe downturn in 2022, is unlikely to ultimately stop there.
The old and the new
This maturity has allowed heavy hitters across global finance to start to see blockchain as a powerful ally rather than a technology to fear. By opening a path away from traditional financial models, moreover, major banks are positioning themselves to take full advantage of all the benefits blockchain technology has to offer – especially by repurposing distributed ledger technology (DLT) to suit their needs and to ease complicated international transactions.
“Fnality speeds up payments for wholesale banks by removing the need for intermediation between central banks and unlocks plenty of benefits beyond speed.”
Rhomaios Ram, CEO of Fnality
Above right: Rhomaios Ram, CEO of Fnality.
Below: Cryptocurrencies have experienced sizable positive periods, despite the current downturn.
DLT is a type of decentralised database, eliminating the need for an intermediary, and recording transactions in multiple places at once. In a distributed ledger, each node processes and verifies every transaction, thereby generating a record and creating a network-wide consensus as to its veracity. This allows for the creation of an immutable database – once an entry is made, verified and stored, it cannot be altered or deleted, and any changes are permanently recorded. This has clear benefits for all transactions, and payments in particular, as it gives an accurate end-to- end record that cannot be tampered with, handily increasing trust.
One organisation looking to revolutionise international payments by exploiting DLT is Fnality, a company formed by a consortium of 16 major
institutions, including the likes of Lloyds Banking Group and ING. Mirroring the trajectory the financial sector is taking in terms of merging the old and the new, Fnality’s CEO, Rhomaios Ram, is a veteran in the banking world with over 22 years of experience. But far from turning him into a reactionary, Ram says that his background developing electronic trading platforms at Deutsche Bank gave him “an affinity for the technology end of finance”.
Listen to Ram talking about Fnality’s technology
and it’s easy to see why he was asked to come out of retirement to lead as CEO. “Fnality’s mission is to create a regulated financial market infrastructure that removes barriers to the free flow of money,” he explains. “Fnality speeds up payments for wholesale banks by removing the need for intermediation between central banks and unlocks plenty of benefits beyond speed.” Among other things, that includes the advantage of having a single transactional layer – thereby reducing the risks of payment failure. To understand what Ram means, you need to appreciate the challenges currently afflicting global payments. Currently, international transactions face a number of hurdles that significantly slow down transactions. Rather than the near-instantaneous experience enjoyed by domestic retail customers, an international payment can sometimes take days to process. “If you look at cross-border payments today, there are a range of challenges that create inefficiencies and lead to a poor customer experience,” explains Samantha Emery, payments industry and development director at Lloyds Banking Group. “International payments continue to be executed in a non-instantaneous manner due to fragmented data, message formats, the differing operating hours of real- time gross settlement systems and the complexity of banks in different time zones.”
This is obviously a problem and can hinder business transactions due to the inefficiencies involved. Time sensitive cross-border deals could, for instance, face significant delays due to a multiplicity of different banking layers, not all of which are operating on the
40 Future Banking /
www.nsbanking.com
Igor Faun/
Shutterstock.com; Fnality
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