The financial industry likes to talk about speed. Real -time payments. Instant regulations. Ach the same day. But making a carriage pulled faster does not transform it into a car. The problem of traditional financial regulations is that it has been built for a world that no longer exists.
The unforeseen problem
Traditional financial infrastructure is a patchwork of lots processing systems, corresponding banking relationships and partitioned databases that were at the cutting edge of technology when the Telex machines traveled the Earth. Even the “real -time” payment rails today are largely smoke and mirrors. They are just faster messages overlapped over the same architecture of the 1970s. They still require reconciliation, suffer from counterpart risks and depend on opening hours in specific time zones.
This is a design problem. Consider what really happens when a fintech promises “instant” international transfers. Behind the scenes, these are pre -funded accounts, managing floating in several jurisdictions and hoping that their reconciliation catches deviations before the end of the month. The customer sees speed, but the company assumes massive operational complexity and working capital requirements.
Old Infra puts a tax on everything
The friction of regulations has a negative impact on all companies that move money. An e-commerce platform awaiting T + 2 for card colonies links the working capital which could finance the inventory. A logistics company managing international suppliers juggles dozens of banking relationships just to pay the bills. Even sophisticated companies with cash management systems spend millions per year for plumbing that makes the value between entities.
It is not sustainable in a world where digital trade occurs 24/7, supply chains cover continents and customers expect an Amazon type efficiency of each interaction. Why do we have delivery the same day on weekends for packages but not financial transfers?
What changes with the blockchain
The public infrastructure of Blockchain offers something that is worlds outside of traditional financial infrastructure: a layer of shared and programmable settlement which works continuously, transparent and without intermediaries. The value can evolve incredibly quickly through a global economy built on blockchain rails.
When Blackrock has tokensié his Buidl Money Market fund, he showed that the 24/7 trade, the near instant settlement and the programmable compliance create real operational advantages. When companies issue tokenized actions, they create a more efficient, transparent and accessible capital market infrastructure. These new financial primitives create entirely new markets.
Beyond the bank
Let us be clear that it is not only the financial services that are reorganized through better payment rails. The real unlocking provided by intelligent contracts is that they can automate complex multi-party workflows which today require armor of back-off staff. A manufacturer can automatically pay suppliers when IOT sensors confirm delivery and quality checks. Real estate transactions can pay atomically, with payment, transfer of securities and regulatory deposits that occur simultaneously. Insurance complaints can trigger instant payments when parametric conditions are met.
The point, once again, is that blockchain does not only digitize traditional finance or provides increased speed. Different rails mean that entirely new commercial models are possible.
The real competition has already evolved
Each large bank is already token workers on Ethereum. The circle moves billions of dollars in USDC per day. Paypal’s stablecoin works on public blockchains. Why do companies still debate if it’s “real?”
They miss the intrigue. While traditional companies optimize their rapid messages and correct their main banking systems, an entire parallel financial system has emerged. Gig’s economy worker in Manila does not know or does not care that her USDC payment has bypassed the corresponding banking network; She cares about knowing if the money has arrived instantly, so that she can use it immediately to pay the rent, buy grocery products or send a little to his family, all without the costs gnaw at her pay check.
The thing about infrastructure revolutions is that they are not themselves announced. In five years, “we always use ACH” will be the new “We are still hosting our own internal servers”. It is technically possible, unnecessarily expensive and a clear signal that you have lagged behind.
The upgrading of payment rails has occurred. It has simply not been distributed also.
