The financial industry loves to talk about speed. Real-time payments. Instant payment. ACH on the same day. But making a carriage faster doesn’t turn into a car. The problem with traditional financial reconciliation is that it was built for a world that no longer exists.
Uncertainable Issues
Traditional financial infrastructure is a patchwork of batch processing systems, correspondent banking relationships, and cutting-edge siloed databases as telex machines roam the globe. Even today’s “real-time” payment rails are primarily smoke and mirrors. They are faster messages layered on top of the same 1970s architecture. They still need settlements, suffer from counterparty risks, and rely on opening hours in a particular time zone.
This is a design problem. Think about what actually happens when FinTech promises an “instant” international remittance. Behind the scenes, they are pre-funding accounts, managing floats floating in multiple jurisdictions, hoping that the settlement will catch inconsistencies before the end of the month. While customers see speed, the company is responsible for large operational complexity and working capital requirements.
Old infrastructure taxes everything
The friction of settlements has a negative impact on all businesses that drive money. The e-commerce platform waiting for the card settlement will link working capital that can fund the inventory. Logistics companies that manage international suppliers handle dozens of banking relationships just to pay invoices. Even sophisticated companies with financial management systems spend millions of people each year on plumbing that moves value between entities.
This is not sustainable in a world where digital commerce occurs 24/7, supply chains spread across the continent, and customers expect Amazon-like efficiency from any interaction. Why is there same-day delivery of packages over the weekend, but not financial transfers?
What changes in blockchain
Public blockchain infrastructure offers something that is beyond traditional financial infrastructure. Value can travel very quickly through the global economy built on blockchain rails.
When BlackRock tokenized the Buidl Money Market Fund, it showed the realisation that 24/7 trading, near-instant settlements and programmable compliance create true operational benefits. When companies issue tokenized stocks, they create a more efficient, transparent and accessible capital market infrastructure. These new financial primitives create a whole new market.
Beyond the bank
Let’s make it clear that financial services aren’t the only ones being revamped through better payment rails. The actual unlocking provided by smart contracts is that they can automate the complex multi-party workflows needed by an army of back-office staff today. Once the IoT sensor checks delivery and quality checks, the manufacturer can automatically pay the supplier. Real estate transactions can be resolved atomically when payment, ownership transfer, and regulatory applications are made simultaneously. Insurance claims can cause instant payouts when parametric conditions are met.
Again, blockchain is not just about digitizing traditional finance or increasing the speed. Different rails mean that a whole new business model is possible.
The real competition is already ongoing
All major banks already represent assets in Ethereum. Circles travel billions with USDC every day. PayPal’s Stablecoin runs on the public blockchain. Are there any companies still debating why this is “real”?
They miss the plot. Traditional companies optimize their fast messaging and patch their core banking systems, but in parallel the entire financial system is emerging. Manila gig economy workers don’t care if they know or don’t know that USDC payments bypassed the correspondent’s banking network. She cares if the money arrives soon. That way you can use it immediately to pay rent, buy groceries, or send them home to your family.
The thing about the infrastructure revolution is that they don’t announce themselves. Five years later, “We’re still using ACH” will be a new one, “We’re still hosting our own servers in-house.” It’s technically possible, unnecessarily expensive and a clear signal that you’ve been late.
Payment rail upgrade has occurred. It’s not evenly distributed yet.