The San Fransisco-based digital bank SoFi Technologies is set to become the first US bank to leverage Bitcoin’s Lighting network for blockchain-powered international money transfers. Users will be able to send money internationally directly from the SoFi app, enabling the bank to compete in the global remittance market, which is valued at over $740 billion. This will put the bank in direct competition with the antiquated SWIFT system, which still uses technology from the 1960s.
According to reports, SoFi’s new international money transfer service will allow customers to convert US dollars into Bitcoin in real-time and route the funds across borders via the Bitcoin Lightning network, where funds are delivered directly to the recipient’s bank account in their country’s currency. The process will take seconds (not days like traditional banks), will not be stalled on holidays or after hours, and will cost a fraction of the fees levied by traditional banks. This is a game-changer.
As AInvest articulates:
“SoFi’s [new] remittance service is a masterclass in solving pain points. Traditional remittances are plagued by slow processing times, opaque fees, and currency conversion hurdles. SoFi’s solution? A real-time, low-cost system that converts USD to Bitcoin on the Lightning Network, routes funds instantly via Lightspark’s Universal Money Address (UMA), and then converts back to the recipient’s local currency. This bypasses intermediaries, slashes fees below the World Bank’s 6.49% average, and delivers funds in seconds…
“SoFi’s playbook is unique. Traditional remittance firms rely on a patchwork of intermediaries, resulting in bloated fees and delays. Meanwhile, crypto-native platforms like Coinbase or Kraken lack the regulatory infrastructure to offer integrated financial services. SoFi bridges this gap by embedding blockchain into its core offerings—savings, lending, insurance—and scaling it with a federally chartered bank’s credibility.”
As a small business ourselves with frequent overseas payments for incoming and outgoing funds, bank transfer fees have always been a bloated expense on our accounts – which is non-sensical in light of the technology available today. The adoption of blockchain technology will be a critical factor for the survival or not of traditional banks. SoFi is certainly leading the way – and the floodgates will open quickly. Banks should be studying Kodak.
In 1975, a Kodak engineer invented the first digital camera and in 1986 Kodak’s research labs developed the first mega-pixel camera. However, executives failed to make the right strategic choices to push into the digital camera sector, and, well, the rest is history.
“A generation ago, a “Kodak moment” meant something that was worth saving and savoring. Today, the term increasingly serves as a corporate bogeyman that warns executives of the need to stand up and respond when disruptive developments encroach on their market.”
This is a Kodak moment for banks.