Banking 3.0

Published in

Automata

3 min readJun 10, 2019

Cryptocurrency and blockchain networks offer unprecedented advances in comparison to the technology used by financial industry incumbents. Banking remains the largest sector ripe for disruption, with the dawn of mass-crypto adoption promising to unlock true global financial and economic potential — banking 3.0

Threat to Banks

Whilst banks and financial institutions offer digital access to their services (via the internet and mobile apps) the way they conduct business, and process their back-end transactions, is very much ‘analogue’. Communication for the debiting and crediting between private banking ledgers means that vital services, such as cross-border (and even domestic) payments are costly and time-consuming.

Moreover, an estimated 2 billion of the world’s population remains ‘unbanked’ — without access to basic, reliable, and vital financial services.

The growing threat from disruptive fintech startups, using lean deployments of cutting-edge solutions, means that traditional banking services are looking at stark revenue and customer shortfalls. According to research, over $100 billion in fees and revenue is at stake. Moreover, by 2020, 35% of the market will be affected by digital disruption created from demographic shifts, cloud, mobile and big data.

Banks face a simple choice. Adapt (and adopt) within a new ecosystem of cutting-edge technology, or face rapid revenue/market share decline.

What is Banking 3.0?

Simply, banking 3.0 is defined as ‘digital banking’. As opposed to the current traditional product offerings of analogue finance with a digital facade, banking 3.0 is truly virtual finance. It includes both traditional businesses and disruptive fintech startups utilizing the likes of blockchain and cryptocurrency technology, as well as

With the development and rapid adoption of cryptocurrency networks, such as Bitcoin, an entirely new services ecosystem has emerged. It is now possible for anyone with an internet connection to store, send and receive tokenised money — as fiat or cryptocurrency — often with minimal or zero fees. The proliferation of product offerings continues to increase exponentially.

Advances in machine learning, cloud processing and automation are also being applied to these new banking products. For example, where investing was once the bastion of the wealthy and elite, it is fast becoming democratised, accessible for all.

2020 and Beyond

Investing, savings, digital securitisation, money transfers, fundraising; all just a small fraction of transformative banking examples. Whilst new market entrants previously found it difficult to break into the financial services industry, fintech disruptors will now being to drive new business models in order to deliver banking 3.0.