July 16, 2024
By Anjali Kochhar
Blockchain-based payments hold considerable promise for delivering seamless financial transactions. As Web3 and blockchain technology expand and mature, doubts arise concerning their potential for widespread adoption in financial services. Rita Martins, author of Web3 in Financial Services and editor of the weekly publication Web3 Crossroads, offers her thoughts on the subject. Martins, the former Global Head of FinTech Partnerships at HSBC, recently spoke with Convergelive from Money20/20 about the technological developments, opportunities, and problems that Web3 and blockchain present in payments and financial services.
Martins highlights that while the news often focuses on the negative aspects of blockchain technology in financial services, such as the FTX collapse, there are significant use cases and benefits. Reflecting on her time at HSBC, Martins notes that the technology was initially too early for integration. However, she now observes increased uptake in the legacy banking sector, with major players like BlackRock embracing blockchain technology.
According to Martins, Web3 is progressing beyond centralisation and data ownership, aiming for a balance between ownership, centralisation, and security. The decentralised nature of blockchain technology offers crucial security and transparency, despite trade-offs in deploying tokenised assets on permissioned blockchains.
Martins emphasises the impact of stablecoins in emerging markets, particularly for cross-border remittances. She points to the Philippines, where stablecoins enable faster and cheaper money transfers for people working abroad who send money home to their families. In regions with less developed financial systems, stablecoins and blockchain technology present unique opportunities for significant short and long-term impacts.
Tokenisation of real-world assets (RWA) is another area Martins addresses. She mentions Goldfinch Finance, which uses RWA as collateral to provide loans in emerging markets. This trend extends to major financial players like BlackRock, which issued a Bitcoin ETF and announced a tokenised fund. Martins highlights the potential of tokenisation to create new solutions across different asset classes, offering more liquidity and reduced costs.
Central bank digital currencies (CBDCs) are developing worldwide, but privacy remains a significant concern. Martins notes the varying approaches to data collection, with China aggressively collecting data while the European Union does not. Educating consumers about CBDCs and addressing privacy concerns are essential for broader adoption. Additionally, international interoperability and regulation present challenges for CBDCs in cross-border payments.
Regulatory uncertainty and a lack of clarity have hindered the industry. Martins believes traditional banks will fully embrace Web3 once regulations are established. She also highlights the need for technological developments, such as privacy layers in public blockchains, to ensure client information confidentiality.
Martins envisions a future where consumers are unaware of whether they are using blockchain or traditional financial services. She predicts that blockchain technology will seamlessly integrate into financial services, becoming one of the many tools banks use, much like cloud or on-premise solutions today.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
