Andrey Sergeenkov


How Blockchain is Changing Money Transfers

In our current time of drastic and revolutionary changes, it is imperative to radically rethink business models and archetypes in general. This article will discuss the merits of blockchain, its impact on the financial system and the experiments some companies have conducted in this area.

Traditional financial services providers, banks in particular, are lagging behind the pace of technology development. According to one report from Accenture, most large banks use systems from the 1970s or even the 1960s, and newer computing technologies are simply laid on top of this foundation to support providing banking services online or via mobile devices. This means that the lion’s share of money goes to support the operational status of these systems, and not to introducing innovations. This, while the old technologies are still operating, and creaking with age.

If we consider the introduction of mobile and Internet banking technologies as an example, you can see that most companies first wait for a certain level of technology development before investing in them.

The fact that most of existing players use outdated technologies contributes to the emergence of companies that make financial services more efficient through innovation, which, at some point, could change the entire financial industry beyond recognition. For example, BRAVO, which was launched as an application for microtransactions in 2015, quickly realized the needs and opportunities of a changing market and is already switching to blockchain with the possibility of anonymous payment using cryptocurrencies.

Maria Luna, CEO at BRAVO explains:

“The cryptocurrency market is worth over $290 billion dollars, but many users don’t know how to acquire coins and let alone, where to spend their coins. Even though there is a strong and real use case for service professionals, artists, small merchants and everybody else, at the moment, many shops and service professionals don’t have the ability or a simple solution to accept cryptocurrency. BRAVO will change this and will let anyone pay or get paid in cryptocurrency seamlessly as we already do for fiat currency transactions.”

Blockchain, however, attracted the attention not only of new financial companies, but also traditional players. The reason for this is that when blockchain technology reaches its peak, it will have its strongest impact on financial business models:


By eliminating the need to rely on intermediaries to approve transactions between consumers, blockchain technology can speed up payments at lower rates than those charged by banks.

Clearing and settlement systems

Blockchain technology can reduce operating costs and bring us closer to real-time transactions between financial institutions.


By providing companies with immediate access to liquidity through the initial placement of coins (ICO), blockchain creates a new crypto-economic financing model.


Via the “tokenization” of securities, such as stocks, bonds and alternative assets, blockchain strengthens the structure of capital markets.

Credit and loans

By eliminating the need for credit intermediaries, blockchain can make borrowing money safer and provide for lower interest rates.

Payments and blockchain

Today, trillions of dollars are “hovering” around the world due to an outdated system of slow payments and additional fees.

If you work in San Francisco and want to send part of your family’s salary to London, you may have to pay a fixed fee of $25 for the transfer, as well as additional fees of up to 7%. Your bank will receive a commission, and so will the bank accepting the payment. In addition, you will pay hidden exchange rate commissions. At the same time, it can take at least three days to complete the transaction.

The average transaction cost for the money sender is 7.68%. That is based on a transaction fee — a transfer fee or a hidden difference in exchange rates. Participation in transfers of money is very beneficial for banks and they are in no hurry to lower their commissions. Cross-border transactions, from transfers to the payment of loans in 2016 accounted for 40% of the global transactional income of banks.

Blockchain can beat this system by offering a safer and cheaper way to send peer-to-peer payments (P2P) that do not require an intermediary. Cryptocurrencies are built on the basis of a public decentralized ledger, which anyone can use to send and receive money. Therefore, they eliminate the need for trusted third parties to verify transactions.

Thanks to this, blockchain technology provides people around the world with access to fast, cheap, and unrestricted payments.

In developing countries around the world, blockchain promises to provide billions of people with access to financial services. One example of this is BitPesa, a blockchain-based company focused on facilitating B2B payments in Kenya, Nigeria and Uganda. BitPesa’s monthly trading volume is $10 million. With a regular cross-border transfer to Kenya, the commission amounts to a whopping 9.2%. With the help of blockchain, BitPesa can reduce it to 3%.

Since transaction fees can sometimes be high, developers are actively developing cheaper solutions by scaling cryptocurrency networks, including Bitcoin and Ethereum. Other cryptocurrencies, for example, Bitcoin Cash, now offer low-cost transactions.

More by Andrey Sergeenkov

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