According to a research article from Wiley Online Library, financial innovation impacts the economic environment significantly. The research focused on the developing economies of Pakistan, China, and India. The findings proved that financial innovation is a powerful tool for technology development, financial progress, and, ultimately, economic growth.
Other studies on the relationship between economic development and financial technology prove the same theory. In Bangladesh, Springer Open reports that the Cointegration test confirmed a long-run relationship between financial innovation and economic growth. The report concluded that Bangladesh’s government should encourage innovations in the financial sector, primarily to facilitate financial service access.
Over the last few years, blockchain technology has been the new tune revolutionizing every industry where technology experts apply it. However, the financial sector seems to be the most touched by the current innovation. It is not quite a wonder given blockchain technology came to be during the introduction of the first cryptocurrency.
Many financial companies have been pushing to integrate blockchain technology into their products and services, although Apollo Fintech seems to hold the crème. The company based in Africa and North America has been stretching blockchain technology to the limits, and their latest introduction to the financial sector is unprecedented. The company announced the completion of the first National Payment Platform (NPP), a platform that prides in features and capabilities that will accelerate every country’s economic growth.
The NPP’s Central Bank Digital Currency
The national currency is the primary driver of a country’s economy. As a result, a change for a better currency, digital currency, is a step towards economic growth. Many central banks have been trying to create their digital currencies, and different of them were in distinct stages. However, none had made it to launch their first, although Apollo Fintech is chipping in to provide them with a working solution.
One of the significant aspects of the NPP platform is its ability to support central banks to issue central bank digital currencies. The platform is finally providing a way for central banks to give digital currencies and circulate to the market through commercial banks and authorized agents. Commercial institutions can now harness the power of blockchain technology and enable societies to enjoy frictionless transactions.
Economic Benefits of the NPP
The National Payment Platform will be supporting the issuance and distribution of central bank digital currencies. The CBDCs will play significant roles in the financial systems of countries. Some of the crucial economic benefits include:
Seamless Cash Transfers
For a long time, financial transactions have not been the best across the globe. Banking service providers needed urgent solutions for transaction processing to support real-time results for customers. One of the significant innovations was mobile money transfers, although it did not quite bring the expected efficiency. However, Apollo Fintech’s new platform will provide the long-awaited speed in cash transfers from user wallets. Users will enjoy instant cash transfers from their wallets, including transfer to users abroad. It will be a significant boost for international traders who had to wait up to 7 days for international payments.
Financial Service Access
The National Payment Platform supports access to financial services using mobile devices such as smartphones. Users only need to sign up online for a wallet and access cash transfer services even with outdated phone models. Users can send payments using the platform’s app, SMS, offline codes, QR codes, and cards. These user capabilities will accelerate access to financial services, given that the World Bank estimates that 1.7 billion adults remain unbanked despite two-thirds of them owning a mobile phone.
Intermediaries had the effect of making transaction costs high to cater to their wages and salaries. However, with the ability to execute peer to peer transactions, cash transfers will cost a lot less. Commercial banks will further save significantly on the monies initially used in printing bills as they shift to digital currencies. In the United States, the cost of printing a $100 Federal Reserve note is 19.6 cents per note.
Among the problems facing financial institutions and the economy at large is the rise in financial crimes. Individuals and entities have been victims of cybercriminals and con artists’ fraudulent activities and ended up losing their money. Further, unauthorized access and use of credit cards and break-ins at ATMs have still been a concern. However, a shift to digital cash eliminates such problems as individuals will not hold stacks of cash. The NPP utilizes blockchain technology that provides unmatched security, which gives cybercriminals zero chance.
The features of a distributed and immutable ledger minimize the chances of hacking or altering transactions once they are complete and recorded on a block.
While the NPP supported central bank digital currencies will operate under blockchain technology, they are notably not cryptocurrencies. However, they will facilitate the adoption of crypto assets since the online wallet will support other coins such as the Apollo Cash. Central banks were opposed to the idea of cryptocurrency due to their decentralized nature.
As a result, being able to issue a currency that features blockchain capabilities and control it is a milestone. Central bank digital currencies will be under the central banks’ authority, interoperable, and universally accepted, making them the perfect currency for driving economic growth.