A Guide to Financial Services
The convenience of making financial services and financial transactions in general had been revolutionized first when telegraph companies have introduced wire transfers. With the new era of financial services however, it is now the time that we should address question of what would be the future of such?
Let us begin this topic first by seeing how things have gone so far for the last 100 years since the time when wire transfers were publicly introduced. Transferring funds using wire transfer methods through a bank is not a single step process but a multi step procedure. It works like this, the sender will approach his/her bank and order the fund transfer to an account. The sender will provide the bank unique codes to be able to let the bank know exactly where the fund should be transferred.
The bank of the sender will be contacting the bank of receiver by means of sending a message via security system, creating signals that a transfer is ought to be made. The receiver’s bank will get this message including the instructions for settlement and then, ask the bank of sender to transfer the specific amount in the message. What happens next is, the bank of send will proceed on transferring the amount. This is not done in just one go but bit by bit. With this being said, the entire process may take anywhere from few hours even to couple of days for the whole sum be completely transferred.
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To be able to make the transfer, both banks should have a reciprocal account on each other. And if that isn’t the case, the transfer will be made using a correspondent bank that’s holding such an account. As one would notice, this transfer relies largely on mediator, taking more time than it should and also, prove to be costly because banks charge some fee for the services they’re offering. But distributed currencies are providing viable alternative in making this process easier actually.
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What set these types of services apart from the conventional services is that, they don’t rely on central mediator rather, they are operating using cryptographic protocols. Here, the process is way simpler, faster and most of all, more efficient. The system is transparent as well to both users while traditional systems used are more vulnerable to fraud because of complex processes involved. What appears to be the drawback for this service is, it is easier to trace transactions back to every creation of the unit value.
Still, there are increasing number of individuals who use distributed services and even peer-to-peer mobile transfers to which a network operator help user in transferring funds simply by sending SMS.