07 April 2022
The Digital Transformation of The Banking Sector
The Digital Transformation of The Banking Sector

The concept of storing value can be traced as far back as the XXIII century B.C. in Mesopotamia, where regional institutions facilitated trade between neighboring kingdoms. Other similarities can also be found in Ancient Greece as city-states began minting their own coins. In terms of resemblance to our current systems, the first ‚Äútrue‚ÄĚ bank appeared in Genoa during the Late Middle Age. In 1407 local authorities allowed the San Giorgio partnership to issue loans, accept money for deposits, and make transfers to other countries. All the transactions were recorded in special journals and ledgers. This, essentially, marked the foundation of the first credit bank in the world.

The centuries that followed witnessed the flourishing of Florentine and other European banks, all of which relied on brick-and-mortar branches and immense amounts of paperwork to keep a straight record of transactions. A true revolution in human advancement occurred in the early 1950s with the digitization of data recording. The shifts permanently changed the financial sector as records were transferred to digital storage and, eventually, online.

Banks going Digital

The digital transformation of the banking sector has significantly facilitated all related operations and data exchanges, leading to the development of specialized and secure network protocols like VISA, MasterCard, SWIFT, and others. Though highly efficient and convenient, the given measures have never quite eliminated the need for the physical presence of both the bank branches and the clients.

To this day, numerous banking operations can still only be concluded solely in the presence of a physical party with a physical signature placed on a physical document. The given measure is obligatory not only for individuals but also for businesses. The result is a constant waste of time and resources, which undermines the essence of the digital transformation of the banking sector.

With the development of smartphones and online personal accounts, banks have slowly attempted to take on the new digital stage by expanding the number of operations that clients can conduct via app interfaces. This is an important pivot; however, the individual bank branches are still necessary as they provide a centralized way to store records and transaction histories and provide accounting and bank teller services.

Changing the Face of Digitization

True digital transformation cannot be achieved without fully integrating digital currencies into the traditional banking services framework. After all, digital transformation is a process that entails the complete digitization of a sector without the need for physical infrastructures. Blockchain technologies are known for pushing in this direction of autonomy from real-world hubs. The rapidly growing Decentralised Finance (DeFi) sector, which can be thought of as a digitized form of banking operations, is a testament.

Consider how the integration of blockchain technology in the banking sector would allow clients to independently conduct transactions on a smart contract ‚Äúif-then‚ÄĚ scenario basis, as the underlying and fully automated blockchain network foreseen.¬†¬†

As traditional banking services move slowly towards digitalization, Embily’s global payment network is an example of a crypto-friendly financial platform disrupting the bank sector through blockchain technology. For example, Embily’s bank card supports cryptocurrencies and seamlessly converts them to FIAT, allowing funds to be spent anywhere in the world that VISA is accepted. Companies like Embily have the potential to erase the boundaries between the centralized and decentralized financial worlds, making them interchangeable or mutually complementary.  

Read about A Post-Banking World https://eu.embily.com/blog/a-post-banking-world

Learn more about crypto debit cards here - https://embily.com/