Even before it launches, Facebook’s cryptocurrency Libra is causing jitters amongst the financial elite as well as political powerhouses across the globe. The Eurozone has decided to roll out real-time payments to its 19 members with possible additions across the European economic bloc just to stand a chance against the launch of Libra scheduled for 2020. According to a report by Reuters this week, the Eurozone officials are projecting that all the member nations’ central banks will enable the real-time payments before the end of 2020.
It is notable that real-time payments have been available for these banks since 2017 but only about 60% of these banks had activated them for their users. However, now, with the foray of several Fintech companies into the banking sector, the banks have less time to prepare and they absolutely have to evolve lest they become extinct.
Ripple is one company that has been making headwinds in the space with its promise for real-time payments across borders especially targeted at these large institutional banks. The company has attracted more than 200 banks who are now using the blockchain startup’s XRapid solution for cross-border transfers.
Facebook launched the whitepaper to the Libra project just last week and is expecting to launch the project in the testing phase before the end of the year with a possible full launch in the first half of next year. This gives banks such as those of the Eurozone little to no time to create a competing platform to Facebook’s or even Ripple’s with the ability to scale massively with minimal overhead costs. “The clock is ticking,” said Etienne Goosse, director general of the European Payments Council (EPC).
Goosse acknowledged the fact that it is Facebook that could spell the doom for traditional banks despite other actors in the sector offering similar solutions to Facebook’s proposed system. She said that Fintech companies are here to stay and banks need to make fast adjustments if they hope to survive the oncoming financial wave.
“They come with a global solution, under a global brand offering many things that the consumers seem to find wonderful,” he said adding that “So we have no time.”
Banks activating real-time payments may not be enough to compete against the likes of Facebook. This is because with Facebook and other Fintech companies, the only action a user does is install an application and they are connected while banks still require the user to jump through hoops and sign several documents before getting access to services, something that will probably discourage several potential customers from joining these banking platforms.