Blockchain technology is continually reshaping the financial industry, offering promising transformations in transaction processing. Its potential is immense, as outlined in a recent report by digital payment network Ripple in collaboration with the United States Faster Payments Council (FPC).
The report presents a robust case for blockchain’s role in expediting payment systems and the ensuing cost savings. But is the financial sector ready to embrace this emerging technology on a large scale?
Financial Institutions To Embrace Faster Payment Systems With Blockchain
The survey, which received inputs from 300 finance professionals spanning 45 countries, sheds light on the growing consensus about the advantages of blockchain. It illustrates a palpable shift in the perception of this technology across sectors including fintech, banking, retail, consumer technology, and media.
Results show that global payments leaders are dissatisfied with legacy rails for cross-border payments.
Learn why 97% believe #blockchain and #crypto will transform the way money moves in our latest whitepaper with @Faster_Payments. https://t.co/qacuAAzZrR pic.twitter.com/ForjM05Wbb
— Ripple (@Ripple) July 28, 2023
The majority of the surveyed professionals, comprising analysts, directors, and CEOs, strongly assert the potential of blockchain. Approximately 97% are confident that blockchain technology will be instrumental in expediting payment processes over the upcoming three years
This widely-held conviction underscores the positive outlook toward blockchain, indicating a readiness to welcome its disruptive capabilities.
A Catalyst For Cost-Efficiency In Cross-Border Transactions?
Furthermore, the report highlights the cost-saving potential of cryptocurrencies. More than half of the respondents agreed that cryptocurrencies could significantly reduce payment costs, both domestically and internationally.
The report predicts that blockchain’s application in global transactions could save financial institutions an estimated $10 billion in cross-border payment costs by 2030, substantiated by findings from fintech analysis firm, Juniper Research.
With the rapid growth of e-commerce and businesses looking to penetrate international markets, the report anticipates a surge in cross-border payments. It estimates global cross-border payment flows could reach roughly $156 trillion by 2030, buoyed by a compound annual growth rate (CAGR) of 5%.
Despite the optimistic views, the survey revealed a divide in opinions regarding the timeline for widespread merchant adoption of digital currency payments. About 50% of the respondents were optimistic about significant merchant adoption within the next three years.
However, predictions varied for the likelihood of adoption within the next year, with the Middle East and African regions exhibiting the most confidence and Asia-Pacific the least.
Particularly, 27% of respondents from the Middle East and African regions anticipate that a majority of vendors will adopt cryptocurrency payments in the following year. While a mere 13% of the Asia-Pacific (APAC) region forecasted the same transition period.
Regardless, over the past 24 hours, XRP has shown a slight uptrend up by 0.7% with a trading price of $0.71, at the time of writing. This price action comes after the asset experienced a 4.1% decline in the past week.
Featured image from iStock, chart from TradingView