DeFi is pushing finance towards its e-commerce moment

DeFi

Banks are about to be hit by the same sucker punch that e-commerce landed on brick and mortar stores and how Netflix landed on cable TV.

Banks need to start adopting digital asset services solutions in this digital era, just like how every retailer needs e-commerce to be a part of their core business to avoid being left behind.

The financial industry has adopted digital solutions on a piecemeal basis with a disjointed assortment of systems and integrations as a result, with fintech companies building sleek UX and top-layer solutions on top of a complete mess.

Emergency loans in the US, for example, are a lot quicker with fintech through traditional banks, Small Business Administration loans or virtual banks in HK.

Fintech was a false dawn for internet-based money and innovations that banks have mainly co-opted and the industry, serving up better user experiences but very little else. Existing fintech is classified as the old guard of TradFi, with a fancy frontend on the same banking technology that existed 20 years ago.

DeFi represents a step-change in providing more than just digitisation. It creates an all-encompassing base layer, always-on and does not have a central point of weakness. We have already seen crypto trading take off in a big way and believe that lending protocols will change how money works.

TradFi has yet to decide how it feels about crypto

Traditional finance (TradFi) is not ready to go entirely into the crypto industry, just like Walmart has only half-heartedly embraced early e-commerce. Some legacy institutions like JP Morgan are co-opting with crypto and, at the same time, occasionally dismissing it.

Banks need to stay on top of how DeFi can change the modern financial system, similar to how e-commerce has disrupted industries. With banks trying to adopt DeFi, fintech will become increasingly meaningless.

The promise of DeFi is a lot bigger than fintech, and we are building an efficient lending protocol with greater transparency where investors can continuously monitor loan payments, spread their risks geographically and by sector without risks of system failure.

Also Read: All you need to know about the fintech boom in Vietnam

Will TradFi be as forgotten as brick and mortar?

Blockchains are exciting places to build new infrastructure, especially for financial services. Crypto has already shown that you can swiftly launch and attract funding for new ventures. In addition, public blockchains such as Ethereum provide the rails for building new financial tools in an efficient way.

The crypto lenders have grown immensely by attracting liquidity and providing a beautifully simple way to deposit assets and earn interest through them or even borrow assets. Soon, crypto native and DeFi will become by-words for the e-commerce world.

To keep up, banks and finance companies will need to embrace crypto as part of an “omnichannel” offering, in the same way, Walmart and IKEA have Click & Collect.

Otherwise, TradFi will be classified as the same negative frame of reference as “Brick and Mortar”.

Momentum is building now

DeFi is still in its early stages, but the ecosystem will continue to mature with more experienced TradFi players joining the front. Not only mirroring TradFi but also improving for better options.

Initially, we were focused on servicing borrowers who struggle to attract debt financing from traditional channels and where over-collateralisation is not an option.

However, we quickly see a future where companies with global business opportunities will unlock economic potential through connection to redefined capital markets. We are already seeing banks starting to serve cryptocurrency and traditional institutional investors getting excited by DeFi, not just for the attractive yields on offer but because of the transparency, security, and ease of use through web apps.

We believe that DeFi represents the e-commerce moment for finance. If you are building a new financial service, you either make it on legacy systems with massive operational risk and liabilities, or you build it on a public blockchain at lightning speed.

Public blockchains like Ethereum will be a natural choice for building financial services and businesses in the future. Investors are already allocating funds to DeFi as they agree that this is the future. However, banks moving into crypto are trying to square a circle and have introduced further liabilities by building on top of their legacy systems.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image Credit: photonphoto

The post DeFi is pushing finance towards its e-commerce moment appeared first on e27.

,
DeFi

Banks are about to be hit by the same sucker punch that e-commerce landed on brick and mortar stores and how Netflix landed on cable TV.

Banks need to start adopting digital asset services solutions in this digital era, just like how every retailer needs e-commerce to be a part of their core business to avoid being left behind.

The financial industry has adopted digital solutions on a piecemeal basis with a disjointed assortment of systems and integrations as a result, with fintech companies building sleek UX and top-layer solutions on top of a complete mess.

Emergency loans in the US, for example, are a lot quicker with fintech through traditional banks, Small Business Administration loans or virtual banks in HK.

Fintech was a false dawn for internet-based money and innovations that banks have mainly co-opted and the industry, serving up better user experiences but very little else. Existing fintech is classified as the old guard of TradFi, with a fancy frontend on the same banking technology that existed 20 years ago.

DeFi represents a step-change in providing more than just digitisation. It creates an all-encompassing base layer, always-on and does not have a central point of weakness. We have already seen crypto trading take off in a big way and believe that lending protocols will change how money works.

TradFi has yet to decide how it feels about crypto

Traditional finance (TradFi) is not ready to go entirely into the crypto industry, just like Walmart has only half-heartedly embraced early e-commerce. Some legacy institutions like JP Morgan are co-opting with crypto and, at the same time, occasionally dismissing it.

Banks need to stay on top of how DeFi can change the modern financial system, similar to how e-commerce has disrupted industries. With banks trying to adopt DeFi, fintech will become increasingly meaningless.

The promise of DeFi is a lot bigger than fintech, and we are building an efficient lending protocol with greater transparency where investors can continuously monitor loan payments, spread their risks geographically and by sector without risks of system failure.

Also Read: All you need to know about the fintech boom in Vietnam

Will TradFi be as forgotten as brick and mortar?

Blockchains are exciting places to build new infrastructure, especially for financial services. Crypto has already shown that you can swiftly launch and attract funding for new ventures. In addition, public blockchains such as Ethereum provide the rails for building new financial tools in an efficient way.

The crypto lenders have grown immensely by attracting liquidity and providing a beautifully simple way to deposit assets and earn interest through them or even borrow assets. Soon, crypto native and DeFi will become by-words for the e-commerce world.

To keep up, banks and finance companies will need to embrace crypto as part of an “omnichannel” offering, in the same way, Walmart and IKEA have Click & Collect.

Otherwise, TradFi will be classified as the same negative frame of reference as “Brick and Mortar”.

Momentum is building now

DeFi is still in its early stages, but the ecosystem will continue to mature with more experienced TradFi players joining the front. Not only mirroring TradFi but also improving for better options.

Initially, we were focused on servicing borrowers who struggle to attract debt financing from traditional channels and where over-collateralisation is not an option.

However, we quickly see a future where companies with global business opportunities will unlock economic potential through connection to redefined capital markets. We are already seeing banks starting to serve cryptocurrency and traditional institutional investors getting excited by DeFi, not just for the attractive yields on offer but because of the transparency, security, and ease of use through web apps.

We believe that DeFi represents the e-commerce moment for finance. If you are building a new financial service, you either make it on legacy systems with massive operational risk and liabilities, or you build it on a public blockchain at lightning speed.

Public blockchains like Ethereum will be a natural choice for building financial services and businesses in the future. Investors are already allocating funds to DeFi as they agree that this is the future. However, banks moving into crypto are trying to square a circle and have introduced further liabilities by building on top of their legacy systems.

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image Credit: photonphoto

The post DeFi is pushing finance towards its e-commerce moment appeared first on e27.

Leave a Reply