Digital taking over the world of business
While many continue to prefer doing things the old-fashioned way, especially when it comes to dealing with their finances, the digital platform is fast growing to becoming what could be the most preferred space for business, and individual finance banking, in the very near future. Managing Director of Dimension Data (DD), Rowan Kleintjes says that ten years from now we could be bypassing the traditional banks, with the current reality of many individuals bypassing banks to lend and borrow money from online service providers – indicating a worldwide trend towards digital transformation.
While efficiency is the main motivation for online activity, service cost and security are also real benefits to legit digital platforms. One of the digital platforms highlighted by Kleintjes as a strong and growing online facility is that of Blockchain which he reckons could be the leading transactional platform for the world.
Today leading vendors such as IBM and Microsoft have released development tools for the blockchain. Kleintjes said, “By the pace the digital sphere and all its perks are taking over, the world could, most probably be a very different place and experience as we have it now.”
Blockchain – one of the world’s leading platforms for digital asset ledger – according to Kleintjes, is one of the latest and fast-growing hubs for financial and other transactions which could make the use of, especially traditional bank services, irrelevant over the next decade unless there is significant innovation from banks. The public blockchain essentially relies on voluntary users to copy, verify, mine and store transactions based on other volunteer network users of computers across the globe. For your efforts as a miner you can earn a minimal transaction fee.
The Bank of Namibia back in September 2017 released a paper that there is no legal provision for the establishment of virtual currency exchanges in Namibia, and stated that it is not legal to tender in Namibia. You cannot use any of the cryptocurrencies in Namibia as payment. Since there are no regulations in place. While in neighboring country South Africa this is an entirely different scenario with nine ATMs and two exchanges where you can exchange your cryptocurrency into hard currency. SA retailers are accepting cryptocurrency as payment.
Kleintjes, who also serves as the Chairman of the Executive Committee of the Internet Exchange Point (IXP) Association of Namibia says mobile is the key to decentralized philosophy of Bitcoin and Blockchain. Kleintjes: “Who has physically walked into a bank within the last month? Within the last 6 months? Within the last year? Banks are the ultimate intermediary. An institution that has portrayed trust in every way possible. From their grandiose buildings with marble columns, to the smartly suited gentlemen that walk through their doors. However, I now think of my bank as an app on my phone and not this massive institution. Mobile has removed me from the physical institution since I don’t have to go there, and I think about my bank in a new way. First we had banking networks that were symbolized by marble pillared edifices, now our banking network is contained in our pockets.”
But so what? What’s wrong with intermediaries anyway? A few things says Kleintjes…
Kleintjes: “Intermediaries are costly, but we still need them. They take a piece of the action and we pay the price. Just ask the corner grocery store about the 3.5% credit fees they have to pay. Or the hard working immigrant who is sending money back home to her family and has to pay a 10% fee just to send money internationally. Secondly, intermediaries are not efficient. It will typically take 2-4 days for that money to be transferred. Even if I’m just transferring money between bank accounts that I own it will take a few days. And, intermediaries are subject to an increased amount of risk. Because everything has to go through one institution, there is a centralized database of information or a central store of value. So if I’m a hacker – this is where I’m going to focus my efforts. Intermediaries are now this honeypot of money or information and they are walking around essentially with a big target on their backs.”
Kleintjes says the world economic forum conducted a survey, and found that expectations are that at least 10% of the global Gross Domestic Product (GDP) in 2025 would be stored on blockchain platforms. Kleintjes: Today, given the Bitcoin and other cryptocurrency markets as well as private blockchain projects (most of which are still in the development phase) we have probably between $100 and $200 billion of value being stored on blockchains. 10% of GDP equates to roughly $8 trillion – so obviously there is a lot of room to grow.” The downside risk of this is the fluctuation in value of cryptocurrencies which has a significant impact, last year alone 70% value in Bitcoin was lost in a few weeks.
Dimension Data (DD) – a leader in the local ICT solutions market, focusing on systems integration for business clients in the country, is recognized and celebrated as one of the most impactful players in the sector by the worldwide leader in IT and networking, CISCO. Recognized as one of the top 100 players in the field of ICT, out of 65000 partners worldwide, DD was awarded the ‘Cisco Winners Circle’ Award for 2017.
Caption: Managing Director of the Dimension Data (DD) Namibia, Rowan Kleintjes and part of his team.