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Influence of Banks on Globalization
Increasing globalization constantly tests our current financial systems. Previous importance placed upon traditional sovereign boundaries has given way to a borderless financial world; one where capital moves freely between citizens of multiple countries.
Globalization has brought about significant immigration of disparate populations. This created demand which has fueled the wire money transfer business for years. Citizens from developing economies move abroad and continually want to send money back home, in hopes of a better life for their families. Multimillion dollar business deals are being finalized between multinational corporations based in different countries. Thus, creation of a reliable internet marketplace has opened up trade between people residing in opposite ends of the world. All of these scenarios are examples of the borderless financial world we’ve built.
The shift to a borderless world economy has not come without a literal price. These changes have made it possible to send money from country-to-country. But, the financial institutions citizens rely on in order to send send money internationally, have seized this opportunity as well. As a result, they recognized the ever-increasing demand for international money transfers, and know they are one of a few financial institutions capable of acting as a middle-man. So, they charge exorbitant fees and can get away with it without repercussion. No foreseeable competition has existed….until now.
Blockchain Provides Relief
Blockchain technology threatens to challenge the status quo of the financial industry. This channel provides a cheap and easy way to move capital from person-to-person. Consequently, it has forced the hands of banks and others who profit from wire transfers. Banks face a decision with many implications: actively fight the technology, or adapt and adopt. Because banks see the disruptive potential of this technology, they recognize technology is likely the wave of the future. In response, several financial giants pledged to explore blockchain technology, because they do want the rest of the market to pass them. It is important to realize that this adoption is still in its earliest phase, but it looks as if there is a technical-financial revolution that even the big players can’t ignore.