Blockchain technology

Blockchain technology is a digital system designed to store a database or record, which is shared through a series of blocks linked to each other, referring to its name (since a chain of blocks or blockchains is formed).

Each time a block is created, it is closed with a cryptographic signature (hash), with which the next block is opened and successively; once the operation is completed, said information is certified and encrypted, which makes this information impossible to manipulate, providing greater confidence and security to users.

Digital system with immutable records

Blockchain technology is characterized by being a digital system with immutable records. This is because every piece of information related to each operation or transaction (within the network) is recorded and cannot be altered, modified, or deleted. This characteristic is what makes blockchain function as a kind of general ledger or cryptographic accounting book.

High level of security

Blockchain technology is a system formed by a wide network, which is made up of a series of distributed and interconnected nodes that are responsible for recording and protecting information cryptographically.

Blockchain technology bases its security on each of these nodes since each node (through which the information passes) generates a copy of the data, which makes it practically impossible to falsify or eliminate the data that remains throughout the entire network, in addition to the fact that each of the components that form part of the network, performs verification and validation of the information with the rest of the blocks.

Decentralized digital system

Blockchain technology is characterized as a decentralized digital system, allowing all users to easily connect and access the network from anywhere in the world. They can verify and approve all data recorded throughout the shared (and distributed) system across each of the nodes that make up the network. In this way, blockchain technology gives all its users control over the network’s operation without the need for a central authority.

Traceability verification

Blockchain technology can track and verify the traceability of all information related to each transaction within the network, as this information has been recorded on each node along the blockchain. This allows each user to access and view each of the operations carried out during a given period of time, in addition to allowing them to make contributions and synchronize all information.

A reliable and transparent digital system

Blockchain technology is characterized by being a reliable and transparent digital system since, when controlled by the users themselves, it allows them to access the information that circulates in their network or system. However, it is necessary for each user to have a digital identity, which guarantees both the identity of the issuer and the origin of the information. This allows, together with the verification of the traceability, legitimacy, and authenticity of any transaction, the network to work on a system that offers total transparency in its processes and procedures, which provides greater confidence to users.

What do you think about this topic? Do you want to learn more about blockchain technology?

If you have any questions or queries, you can write them below (comments section).

The post What is blockchain technology? first appeared on Victor Romero.

High-Performance Computing Act of 1991

The High-Performance Computing Act of 1991 was characterized by advancing U.S. leadership in computing, information technology, and network infrastructure by establishing a coordinated federal program to maintain this leadership, emphasizing research, education, and interagency collaboration.
It is important to note that because this law was introduced by Senator Al Gore (and signed into law by President George W. Bush), this law is also known as the Gore Act.

Contributions to the development of the Internet

This law played an important role in the development and expansion of the Internet, as it fostered the development of various projects and initiatives. Among its most notable contributions are the following:

Funding for Research in Advanced Computing

The Act contributed to the establishment of the National High-Performance Computing Program, in addition to providing financial support for supercomputing research, which was essential to developing the infrastructure necessary for a more efficient and robust Internet.

Creation of the National Research and Education Network (NREN)

The Act helped establish the National Research and Education Network (NREN), conceived as an expansion of the existing Internet infrastructure in the United States, allowing for the construction of high-speed networks connecting various educational and research institutions, laying the groundwork for modern broadband communications.

Development of the High-Performance Computing and Communications (HPCC) Program

The Act helped develop the High-Performance Computing and Communications (HPCC) Program, which fueled the advancement of computing and networking, contributing to innovations such as the Mosaic web browser, which was instrumental in popularizing the World Wide Web (WWW).

Support for fiber optic networks

The Act also encouraged investment in high-speed fiber optic technology, which enabled the rapid transmission of large amounts of data, which was essential for the growth of the Internet.

It is worth noting that this law also encouraged collaboration between federal agencies, universities, and private industry, especially to improve network infrastructure, including fiber optics.

Lessons for Fintech

Fintech companies can draw valuable lessons from the High-Performance Computing Act of 1991 to drive innovation, scalability, and competitiveness in a rapidly evolving technological environment. Below are some ways fintech companies can learn from this legislation and apply it to their context:

Investment in advanced technological infrastructure

Fintechs can invest in high-performance infrastructure, such as server clusters or cloud services, especially for processing large volumes of financial data in real-time, detecting fraud, or performing risk modeling.

Collaboration between sectors

Fintechs can partner with universities to research emerging technologies like blockchain or artificial intelligence, as well as with authorities and regulators to develop regulatory frameworks that balance innovation and security.

Inspired by the NREN’s openness, fintech companies can adopt open banking standards to securely share data, improving interoperability and user experience.

Democratization of access to technology

Fintechs can develop platforms that simplify or democratize access to financial services (loans, investments, and payments) for unbanked populations, using mobile apps or intuitive interfaces, just as the Mosaic browser democratized the internet.

Fintechs can also Offer educational tools (such as financial management apps) to help users understand complex financial products or services, replicating the accessibility promoted by law.

Support for research and development (R&D)

Fintechs can allocate resources to develop new technologies, such as smart contracts or artificial intelligence systems for fraud detection. For example, they can create internal laboratories or partner with research centers to test innovative solutions, such as blockchain-based payment systems.

What do you think about this topic? Were you aware of the High-Performance Computing Act of 1991?

If you have any questions or queries, you can write them below (comments section).

The post Learn more about the High-Performance Computing Act that contributed to the expansion of the Internet and its lessons for Fintech first appeared on Victor Romero.

How did you first learn about Bitcoin and cryptocurrencies?

That’s a very good question. I was introduced to Bitcoin in 2016 thanks to a couple of factors. In fact, the first time I heard about Bitcoin was in 2012, during the World Economic Forum. I was visiting Panama, where many presidents were attending the World Economic Forum conference.

In fact, it was a panel on Bitcoin in 2012 where they were talking about an email about Bitcoin, because Bitcoin was already booming at that time, but I wasn’t paying much attention. It was like a topic that wasn’t the focus of the event, but it was there.

I was living in Venezuela at the time, and it was also very common to talk about Bitcoin there because we had exchange controls, which is why I love to say that we “come from the future,” because the fiduciary system has already failed in my country.

In 2013, unfortunately, due to the circumstances in Venezuela, I had to emigrate to the United States, and there I continue hearing about Bitcoin. In fact, one day I started mining Ethereum, and I remember telling one of my relatives: I’m going to start collecting my roommate’s payments in Bitcoin.

It cost around 7,000 to 8.00 USD, and from then on I started using Bitcoin and started taking it seriously.

When did you become a Bitcoiner?

It was the day my passport expired in the United States, because Venezuela entered into a dispute with the United States, and they expelled all the Venezuelan embassies, so I had no way to renew it. My passport expired.

I went to Wells Fargo, a popular bank in the United States, and tried to withdraw my money, but they couldn’t give it to me because they needed a valid ID. And I was like, “But this is my passport.” I put it in the scanner so the system would know it was valid, but the system wasn’t set up for that, and I just couldn’t get my money.

So, in the end, the solution was that they went to the branch where they issued a check to a friend of mine, who had to come to the branch to cash that check for me. So, in that sense, I was able to collect my money, but that day I said that the fiat system wasn’t going to work even in the United States, that it wasn’t going to work because I was there with my expired passport, and they couldn’t recognize me as the holder. So that day, I said that Bitcoin was going to ” reign”.

These problems present an opportunity to offer solutions, and one of these solutions is Pilsenga. What is Pilsenga? Can you explain it to me?

Since I became a Bitcoiner in the United States, I decided to create the first money transmitter in the state of Florida, at that time it was the year 2016, which was quite difficult for us, as a financial institution (to obtain a custodial bank account to receive funds from customers).

So, we tried dozens of banks to try to get the bank account, and when we were able to stabilize this and allow the bank accounts to operate, we had the difficulty of our customers seeing their bank accounts closed for buying Bitcoin, which was legal, but the banks just didn’t understand what Bitcoin was at the time.

So, after an intense migration to Europe, expanding companies to Europe, I realized that Neo Banks are a necessity in the market, especially if you specialize in the blockchain industry and many other high-risk industries that need to understand regulatory compliance in order to offer banking services.

So I decided to create the first Neo Bank that offers IBAN in euros with SEPA transactions for crypto businesses. This means that if you are an exchange platform, a company that invests in Bitcoin, or has any relationship with Bitcoin and your conventional bank doesn’t understand what you do, we can be the right solution, for which we will ask the right questions.

For example, something as simple as imagining you’re a minor and need to convert your rewards to pay your utility bill. If you work with a conventional bank, they’ll tell you, “Oh, you’re using Bitcoin, you’re losing money.” That response will be because they simply don’t understand the subject. But for us, it’s simple, as we would ask: Mine as an individual?

The process would then go something like this: Okay, please take a photo of your mining equipment. Please send us a utility bill as proof that you use power for mining. If you’re performing a proof of work, please send us a copy of the servers you use for this, so we can run the notes.

We understand the industry and know how to ask the right questions to comply with the law and conduct a legitimate transaction for you. This is how Pilsenga was born, because we came from blockchain to banking to offer and solve the banking needs of companies working with cryptocurrencies.

What are the requirements for opening an account? What’s the process for opening an account at Pilsenga?

Well, that will depend on your sector of activity and whether you are a personal or business customer, but KYC and KYB are fairly standard in most banks. We will probably ask more questions than a conventional bank, because we have to create the customer profile and ask the right questions.

So, for example, if you’re a mining company, we’ll ask you questions about mining and document all that information to include in your customer profile. Typical documents include: Articles of Association, Institution, company capitalization table, shareholders, shareholder KYC, proof of address, and bank statement.

If you are a new business, of course, you won’t need a bank statement, but you will need proof of address and other documents that are very conventional or standard for the financial industry.

I guess they’re also highly regulated, right?

We’re regulated, but we’re a solution that works. You’ll answer the questions we’ll ask you, because you just need to operate transparently in everything you do. So, if you don’t answer the question, of course, you’re a customer, but the bank won’t do AB anymore because we’re regulated, so that’s it. Pilsenga is a regulated institution, and we require KYC clearance if you require these services; otherwise, we won’t be able to provide the service.

What are your plans? What do you expect from Pilsenga?

I think we have five years of growth ahead of us, as we’re tied to a fairly solid and rapidly growing industry. I think Pilsenga will grow three times per year over the next five years.

We’re a conventional company. We’re not in the business of creating “hot water,” nor are we speculators. We simply offer banking services and provide dedicated, quality customer service. We’re not the cheapest on the market, but we do offer something that some businesses need. That’s why we’re competing on the quality of service right now. We’re not the cheapest, but we’re not that expensive either.

So we are the ideal option and we try to provide a really good service. It is expected that next year (2024 ) we will have around 300 customers and in 2025 we will be close to 1000 customers.

I think the new digital banking industry is going to fragment. There will be around 1,000 new banks offering tailored services for businesses, because each company requires special treatment, special understanding, and special customer service.

Video

You can watch the full interview on Pilsenga’s YouTube channel:

Interview with Victor Romero, CEO of Pilsenga

What do you think about this topic? Would you like to learn more about Pilsenga’s business financial services?

For more information you can visit the official Pilsenga website.

The post Interview with Victor Romero, CEO of UAB Pilsenga first appeared on Victor Romero.

They only focus on large clients

Many people think that traditional banks focus their attention and offer services focused on businesses or large clients. However, most traditional banks offer a wide range of financial services, designed for clients of different sizes and characteristics, whether individuals, local businesses, SMEs, among others.

They do not contribute to the local economy

Some people believe that traditional banks do not contribute to the local economy, as they only offer savings accounts and store assets in a vault or safe deposit box. However, the truth is that traditional banks, in addition to safeguarding assets, also use savings/deposits (or a percentage thereof ) to make loans and finance different investments/projects, thus contributing to the circulation of financial assets in the local and national economy.

They don’t innovate

Many people and companies have come to think that traditional banks do not innovate, that their systems are generally outdated. However, the truth is that traditional banks are constantly evolving as they seek to meet the emerging needs of their customers, improve security, and user experience. This constant evolution lies in the ongoing integration of new technologies, such as solutions developed by fintech companies, blockchain, and artificial intelligence, into their traditional systems to improve their financial operations.

In-person banking operations

Some people think that traditional banks only allow in-person banking, which requires people to visit physical offices or branches. However, traditional banks have been evolving and adopting new technologies, which have allowed them to provide greater accessibility to their customers through services such as online banking, ATMs, and mobile apps.

Used only by older generations

Some young people believe that traditional banks are only used by seniors or older generations. However, traditional banks are an important pillar for financial stability, as they offer various essential services such as savings accounts, loans, and financial resource management for people of different ages.
It’s important to note that traditional banks offer a high level of financial security, regulatory protection, and fraud prevention, which attracts customers from different generations and even emerging businesses and financial institutions.

They compete with Fintechs

Many people and companies think that traditional banks are direct competitors of Fintechs, however, as we saw in our previous article, traditional banking does not necessarily have to compete with Fintechs, since in many cases, the joint work between these two systems can end up benefiting the end users of the financial sector.

For example, a traditional bank may hire a fintech company to leverage its technological platform and provide better service to its users. On the other hand, fintechs sometimes rely on existing financial infrastructure, such as payment networks, agreements, ATMs, banking permits, and regulations. By collaborating with traditional banks, fintechs can gain access to this financial infrastructure and expand their reach and influence.

Another point is the regulatory issue. For example, traditional banks have extensive experience in regulatory compliance, a result of several decades in the sector. In this case, fintech companies can partner with traditional banks to leverage this experience and adapt to the sector’s regulatory challenges.

What do you think about this topic? Do you want to learn more about the financial services offered by traditional banks and other financial institutions like Fintechs?

If you have any questions or queries, you can write them below (comments section).

The post Seven myths about traditional banks first appeared on Victor Romero.

Distributed Ledger Technology (DLT)

DLT refers to a decentralized digital system designed to securely record databases and transactions across different participants, locations, sites, or regions without the need for a central authority, using cryptographic methods to validate and synchronize records across the network.

DLT Applications

Currently, distributed ledger technology (DLT) has a wide variety of applications in different sectors, since, unlike traditional systems, DLT allows data and transactions to be managed in a more secure, transparent, and decentralized manner.

It is worth noting that one of the best-known types of DLT is the blockchain, which is characterized by having the ability to organize data in a series of blocks that are cryptographically linked. However, among the most notable applications of DLT are supply chain management for companies, healthcare providers, data management in companies in the healthcare sector, the Internet of Things (IoT), security, and efficiency of financial services, among others.

Why is DLT more reliable and efficient than traditional systems?

Although traditional database systems perform similar functions (storing and managing data), many companies and businesses across different sectors prefer to use DLT for the following reasons:

Decentralization

Traditional database systems are typically managed by a single authority, such as a bank or company. DLT, on the other hand, is a decentralized system designed to distribute data across multiple nodes in a network, eliminating the need for a central authority.

Immutable data

In most traditional database systems, data can be modified and even deleted by authorized users. On the other hand, DLT provides immutable data records, as it uses cryptographic methods and consensus mechanisms.

Security level

Traditional database systems are more vulnerable to failures, data loss, and cyberattacks, especially due to their centralized nature. On the other hand, distributed ledger technology offers a higher level of security, since by distributing data across multiple nodes (users), it becomes more difficult for data manipulation by agents external to the network nodes.

Transparency

Most traditional database systems base transparency and trust on the authority or ethics of the individuals authorized to manage the data. On the other hand, DLT guarantees transparency and trust, as all participants can independently verify and validate transactions, which reduces the risk of fraud or manipulation. This is thanks to the fact that DLT implements consensus protocols, such as proof-of-stake (PoS), proof-of-work (PoW), and others.

What do you think about this topic? Would you like to learn more about this type of technology?

If you have any questions or queries, you can write them below (comments section).

The post What is distributed ledger technology (DLT)? first appeared on Victor Romero.

VH Publishing Corporation

At 23, Víctor Romero founded VH Publishing Corporation, where he stood out with his first publication, “Don’t Wait Any Longer, Do It Now!”, which became a bestseller in the field of microeconomics. During his time as CEO of VH Publishing Corporation, the company was able to expand into comic book publishing, with one of its most notable projects being the Jaimito comic book.

This project allowed Victor Romero to receive various recognitions, influence beyond the publishing field, and become a ” Global Shaper ” of the World Economic Forum. Among the most important aspects that Víctor Romero developed during his experience as CEO of Corporación Editorial VH are:

– Team building from scratch to practically ISO 9001 standard.

– Comprehensive experience in creating editorial projects: concept and idea, illustration, ink, storyboard, graphic design, artist management, and cover design.

– Experience in logistics for the printing, distribution, and collection of 60,000 biweekly copies (nationally).

– Implementation of marketing campaigns.

– Complete experience in creating a television series (2D animation), one season.

– 3D trailer for a film: main 3D design, textures, modeling, rigging, animation, sound effects, and rendering.

– Experience in brand licensing for various merchandise lines, including school backpacks, notebooks, video game apps, shoes, and SMS products.

– Development of a balanced scorecard and KPI for the publishing industry applied to the Jaimito comic.

– Experience managing ISBNs, trademarks, and copyright registrations. He also had experience handling various lawsuits against copyright infringers and appeals with Universal Studios.

Mercury Cash

Víctor Romero was the co-founder and CEO of Mercury Cash, a company that stood out as a financial platform specialized in providing services related to cryptocurrency transactions. During Víctor Romero’s tenure as CEO, Mercury Cash grew into a regulated digital banking platform capable of offering services for the exchange and management of cryptocurrencies such as Bitcoin, Ethereum, and Dash, and was recognized among the top 10 startups in Orlando, Florida, for its contribution to the Fintech sector.

Among the most important aspects that Víctor Romero developed during his experience as CEO of Pilsenga are the following:

– Supervision of 30 team members.

– Experience leading the company’s capital raising of $6,600,000 from angel and venture capital investors in the U.S.

– Obtaining a Money Transmitter License Part II in Florida, USA.

– Development of several banking alliances for the money services business.

– Management and creation of AML procedures under BSA CFR 31 and 70, as well as ongoing training for employees and the compliance department.

– Management of independent audits (compliance and financial under US GAAP) and regulatory examinations.

– Managing communications with the IRS, FinCEN, OFAC, and SEC.

– Management of relationships with approximately 400 shareholders.

– Management of an annual transaction volume of up to $200 million.

– Collaboration with the FBI and the IC3 team to combat online criminal activity.

– Manage and develop KPIs for the Fintech sector.

– Management of the registration process for trademarks, copyrights, and provisional patents.

– Development and architecture of the Central Banking System, Central Payment Processing System, and Central Cryptobanking System.

– Direct supervision of all company activities.

– Implementation of systems and processes for custody, transfer, and exchange of fiat currencies and cryptocurrencies.

– Development of alliances with liquidity providers.

– Implementation of blockchain analysis tools such as Elliptic, AML Bot, and Chainalysis.

– Development, control, and monitoring of the company’s overall performance, risk parameters for high-risk jurisdictions and industries, Business Continuity program, development of code of conduct, policies and procedures for employees, organization of the company’s internal control, development of business lines, among others.

Pilsenga

Víctor Romero served as CEO for over three years (he is currently a shareholder). Pilsenga is a company focused on digital banking and financial solutions for medium-sized businesses. Thanks to his extensive experience (over 10 years) in Fintech, finance, and online banking, Victor has become an important factor in Pilsenga’s vision, which has allowed them to create a solid, reliable, and versatile financial ecosystem for medium-sized businesses.

During Victor Romero’s tenure as CEO of Pilsenga, the company reached Transaction volumes reaching 50 million in its first year, in addition to expanding its reach and bringing innovation to the financial sector, standing out for helping to improve financial inclusion and accessibility for medium-sized businesses through customized and efficient financial solutions that allow companies to be more competitive globally.

Victor Romero’s experience and career are on his LinkedIn profile.

What do you think about this topic? Would you like to learn more about Víctor Romero?

If you have any questions or queries, you can write them below (comments section).

The post Victor Romero: Experience as CEO and projects first appeared on Victor Romero.

Only for cryptocurrencies

Many people and companies believe that Fintech is only related to financial solutions that use cryptocurrencies. However, the truth is that Fintech has the ability to work with different financial systems, therefore, it covers more than cryptocurrencies, since it can work with fiat money and offers a wide range of financial services such as: online banking, digital wallets, payment processors, decentralized finance (DeFi), Blockchain-based solutions, loan management, crowdfunding platforms, financial apps, FIAT ledgers, among others.

Replacing traditional banks

Some people and businesses believe that fintechs are replacing traditional banks, and that traditional banking will cease to exist in the long run. However, fintechs and traditional banking generally complement and collaborate with each other, as fintechs leverage the infrastructure, regulatory expertise, and customer databases of traditional banks, while traditional banks benefit from the technology and innovation developed by fintechs.

For large companies

Some people think that Fintech offers financial solutions exclusively for large companies. However, Fintech offers financial solutions focused on financial inclusion, which allows it to provide financial services to individuals and companies of different sizes (small, medium, and large), making available different financial services that traditional banking cannot offer due to a lack of versatility or technological limitations.

For techies only

Some people believe that the financial technology developed by Fintech companies can only be used or leveraged by tech experts. However, Fintech companies develop different financial tools and services that are accessible, intuitive, and easy to use, and which can be used by people without technical knowledge.

Insecure systems

Some people believe that Fintech companies use insecure systems that are vulnerable to cyberattacks. However, Fintech companies implement different protocols and security measures that allow them to protect users’ personal and financial information.

While no online system is 100% foolproof, we must keep in mind that fintech companies generally comply with different financial sector rules and regulations, which guarantee a certain level of quality and security in their financial products and services.

It is important to highlight that all protocols and security measures applied by Fintech companies are constantly audited to ensure regulatory compliance in the financial industry.

Only for developed countries

Some companies believe that Fintech companies develop financial tools and solutions only for developed countries. However, Fintech companies not only have a significant and positive impact in developed countries, but also offer financial products and services in developed countries. developing countries and in regions where traditional banking systems are not present or have not been able to establish themselves.

Payment -focused technology

Some people and companies believe that fintech companies develop tools focused solely on payments. However, the truth is that fintech companies develop a wide range of financial services, such as lending platforms, insurance technology, blockchain solutions, technological risk assessment, crowdfunding, ledgers (VC and FIAT), wealth management tools, and more.

What do you think about this topic? Do you want to learn more about Fintech?

If you have any questions or queries, you can write them below (comments section).

The post Seven myths about Fintech first appeared on Victor Romero.

Online banking and the democratization of money

Online banking is one of the financial tools that has most influenced the democratization of access to money, as it has allowed a large number of people (who did not have access to traditional banking services) to access better financial services and manage their economic resources effectively and efficiently, allowing them to participate and contribute to the global economy.

Online banking uses cloud-based technology and platforms to eliminate the various barriers that prevent people from accessing efficient financial services. Some of these barriers include geographic location, business hours, lack of physical offices in the city, high operating costs, and demanding requirements, among others.

How Fintech Enables Financial Inclusion

Fintech companies promote financial inclusion in a variety of ways. Below are some examples:

Innovative products

Fintech companies develop a wide range of innovative financial products and services designed to meet the needs of people who are unlikely to have access to traditional financial products or services.

For example, fintech companies design and provide intuitive and secure platforms that allow users to store and manage their money. One example of this is digital wallets, which are ideal for people living in regions with limited banking infrastructure.

Cross-border services

Fintech companies have the ability to offer cross-border services that can meet the needs of users who rely on international financial transactions, giving them the opportunity to participate in the global marketplace.

For example, Fintechs offer the possibility of carrying out cross-border transactions easily and effectively through multi-currency accounts or payment processors, thus benefiting small and medium-sized businesses, independent workers, and teleworkers, since they can offer their products and services (and charge for them) outside their borders.

Greater accessibility

Fintech companies ensure that financial services reach more people, primarily by providing financial tools that operate within online platforms and mobile applications, which can be used by anyone with a smartphone and an internet connection.

For example, Fintechs have taken advantage of the rise of telecommunications and smartphones to develop mobile applications through which customers can access their financial products/services from anywhere and at any time (24/7).

Economical and affordable services

generally offer more affordable and economical financial services, especially compared to traditional banking services. This ensures that financial services are more accessible to everyone and not an elitist or luxury product/service.

For example, Fintech companies offer the opportunity to open accounts without having to maintain a minimum balance and offer personalized services that adapt to the needs of each client, which allows them to eliminate or minimize costs for fees and commissions related to different types of financial operations (transfers, maintenance, currency exchange, among others).

What do you think about this topic? Do you want to learn more about Fintech?

If you have any questions or concerns, you can contact Victor Romero by writing your question below (comments section).

The post Online banking accused of democratizing access to money: How fintech enables financial inclusion? first appeared on Victor Romero.

Traditional banking

When we talk about traditional banking, we are referring to financial institutions that have been offering financial products and services to individuals and businesses for several decades. Typically, these types of financial institutions are authorized to provide their services within a certain region.

The following stand out: loans or credits, savings accounts, current accounts, credit cards, safekeeping of physical assets in safe deposit boxes, among others.

Fintech

When we talk about Fintech, we are referring to a group of companies that use technology to offer financial tools and services that provide solutions at different levels/sectors of the market and the financial system. Fintech provides services directly to users of the financial system and, in turn, offers financial solutions to other entities and traditional banking.

Collaboration between Fintech and traditional banking

In its quest to offer advanced and efficient solutions to meet the changing needs of its customers, traditional banking has been forced to evolve by adopting technology, largely offered by Fintech companies through their innovative tools.

This is because, at present, the needs of clients and users of the financial and commercial system require digitalized processes or online transactions, so they increasingly depend on the use of applications and technological tools to operate in an increasingly fast-paced and interconnected world.

Partnership across the trade finance ecosystem

Due to the rapid evolution and growth of commerce and the financial ecosystem, most companies need to evaluate and test new financial products and services, even if they are comfortable or satisfied with the current service received from traditional banks.

Thus, companies tend to satisfy this need with the services offered by Fintech companies, which offer a wide variety of online platforms and tools tailored to their needs and expectations.

Digitization and automation of financial operations

Fintech, through its various financial solutions, enables the automation and digitalization of all financial processes and operations of a company or organization, thereby minimizing manual work as well as any errors or failures that may arise.

Among the most notable technologies and tools (provided by Fintech companies and adopted by traditional banks) are blockchain technology, cloud computing, distributed ledger technology, and artificial intelligence, which enable more efficient and secure financial transactions.

It’s worth noting that with the continued expansion of Open Banking and Open Finance, fintech and traditional banking will need to work together and collaborate more, creating different solutions that adapt to the sector’s new needs.

Should Fintech and traditional banking compete?

As we saw in our previous article, traditional banking doesn’t necessarily have to compete with fintech companies, as in many cases, the collaboration between these two systems creates a synergy that delivers positive results for end users.

For example, a traditional bank can hire a fintech company to leverage its technology platform and provide better service to its users. Instead of updating or developing a new (its own) technology platform, the traditional bank leverages a pre-existing modern platform (developed by a fintech company).

On the other hand, fintechs sometimes rely on existing financial infrastructure, such as payment networks, banking agreements, permits, and regulations. Collaborating with traditional banks can facilitate fintech´s access to this financial infrastructure and expand their reach and influence.

Another point is the regulatory issue. For example, traditional banks have a long history of risk management and regulatory compliance, a product of several decades of experience. In this case, fintech companies can partner with traditional banks to leverage this experience and address the sector’s regulatory challenges.

What do you think about this topic? Do you think fintech companies and traditional banks should collaborate or compete?

If you have any questions or queries, you can write them below (comments section).

The post The rise of Fintech: Collaboration or competition for traditional banks? first appeared on Victor Romero.

However, the growth of e-commerce has been thanks to the use of technology at a financial level, since different online financial tools and platforms have been developed that have made it possible to satisfy the needs of consumers and businesses.

This is where traditional and digital banking come into play, seeking to gain customer loyalty through services that provide the best financial solutions. Below, we’ll explore some key factors that can determine who can win this battle for customers:

Types of processes in financial operations

Today, customers are looking for financial services that allow them to optimize their processes and minimize the time required for their financial transactions, especially given that many commercial and business processes are digitalized. This is where digital banking takes advantage of traditional banking, as most customers seek automated and digitalized services to enter the vast world of global online commerce.

This is because, through digital banking, customers have access to financial tools that make use of technology and offer optimized and secure processes, which minimize possible errors or manual errors, which are more frequent in traditional banking and in manual or face-to-face processes.

This is because digital banking allows customers to access financial tools that leverage technology to offer optimized and secure processes, significantly reducing manual errors or mistakes, which are more common in traditional banking and manual or in-person processes.

Security and financial information

Digital banking can expand its customer base by outperforming traditional banking in the security and financial information game. This is thanks to the fact that digital banking offers financial services that use tools such as blockchain, the cloud, and even artificial intelligence. However, when it comes to financial information, thanks to the expansion of Open Banking, traditional banking has caught up with digital banking, as it has embraced the use of more open or transparent technology and standards to cooperate with automated, direct processing and the efficient use of multiple sources of financial information data to offer better financial products and services.

Asset custody

An important point for clients is asset custody. In this case, both digital and traditional banking offer this service to meet the needs of each client. Clients who operate with fiduciary assets (usually cash) can rely on custody services through safe deposit boxes and certificates, which allow them to safeguard these types of assets.

For its part, digital banking offers customers custody services for digital assets, such as cryptocurrencies, digital currencies, smart contracts, or non-fungible tokens (NFTs). Many financial institutions (which are part of digital banking) even offer custody services for fiduciary assets similar to traditional banking.

User experience

When we talk about user experience, digital banking generally tends to offer a better experience to customers, especially when compared to traditional banking, since for some people it can be a cumbersome process to go to a physical branch of a traditional bank, especially to be able to make a deposit, withdrawal or some type of transfer.

Through digital banking, customers can carry out any type of transaction quickly and easily, as digital banking features platforms and applications designed to facilitate and optimize financial operations, offering a more satisfying experience for the end user.

On the other hand, traditional banking is highly valued by people who want to receive in-person service, which can be an effective tool in certain situations requiring human contact and more personalized service.

It’s important to note that in recent years, traditional banks have been implementing technology into their financial services, allowing them to offer new solutions and a better user experience to their customers as they have expanded their physical presence and improved their online service.

Should digital banking and traditional banking compete?

It’s important to emphasize that traditional banking doesn’t necessarily have to compete with digital banking, as in many cases, the collaboration between these two systems creates a synergy that delivers positive results for end customers. Below are some examples of collaboration between Fintech and traditional banks:

– Technological leverage: This is perhaps the best-known type of collaboration when a traditional bank hires a fintech to leverage its technological platform and provide better service to its users. Instead of renewing or developing a new technological platform (its own), it leverages a pre-existing modern platform (developed by a fintech).

– Financial Infrastructure: Fintechs sometimes rely on existing financial infrastructure, such as payment networks, banking agreements, permits, and regulations. Collaborating with traditional banks can facilitate fintech access to this financial infrastructure and expand its reach and influence.

– Risk management and regulatory compliance: Traditional banks have a long history of risk management and regulatory compliance, a product of decades of experience. In this case, fintechs can partner with traditional banks to leverage this expertise and address the sector’s regulatory challenges.

What do you think about this topic? Do you know of any other features that digital and traditional banking offer that satisfy their customers?

If you have any questions or queries, you can write them below (comments section).

The post Digital Banking vs. Traditional Banking: Who Will Win the Battle for Customers? first appeared on Victor Romero.