Blockchain offers many new solutions for existing applications. Two of the most exciting applications are blockchain in the supply chain and DeFi blockchain solution. Blockchain will be the gold standard for the world’s banking ecosystem, and it has the potential to transform the current financial system. Decentralized Finance will make a game-changing impact on the world in dozens of different economic dimensions.
DeFi can access many of the flaws in the existing banking system, including giving unbanked access to the financial system. In the coming years, DeFi blockchain solution can offer improved transparency, more robust security while replacing many of the outdated processes.
In this blog, we will discuss how decentralized finance can improve the traditional banking system.
From what we have seen so far, DeFi certainly has the potential to benefit the banking sector. But as with any transformative technology, DeFi’s potential is not limited to just improving on the current conditions. However, its true strength lies in its ability to disrupt the space by integrating new types of financial products and services. Even at the early stage, the technology is showing great promise in that regard. It is already changing the way people borrow and lend money, manage their assets, and trade online.
Here are just some of DeFi’s benefits offering to the banking sector.
1) Lending & Borrowing
A decentralized crypto-friendly banking platform eliminates the involvement of the third party, thereby resulting in reduced counterparty risk and making borrowing and lending affordable, easy, fast, and secure.
Advantages of DeFi lending borrowing over the conventional banking system:
a) Instant transaction settlement
b) No credit checks
c) Collateralization of digital assets
d) Potential standardization in the future
2) Easy & Fast KYC (Know Your Customer)
According to the recent report, financial institutes across the globe spend $60 million to $500 million per year to keep up with the KYC to comply with diligence regulations every year.
The decentralized crypto banking platform eliminates the need for user KYC each time they visit an online banking platform to access financial services. Blockchain would permit independent verification of one customer by one company to be accessed by other companies so the KYC process wouldn’t have to start over and over again.
3) Remove Third-Party Involvement with Smart Contract
Smart Contract is a special algorithm that automatically executes the transactions when predetermined terms and conditions are met. Smart contracts allow users to buy/sell properties, exchange shares, money, proprietary, and documents. One of the most important features of a smart contract is that you won’t need to use third-party services such as agents, brokers, notaries, etc.
4) Reduction of Cyber Crime and Fraud
Built on blockchain technology, the decentralized crypto bank has the potential to eliminate fraud in the financial world. Generally, most of the crypto banking platforms around the globe are built on a centralized database. It makes them more vulnerable to cyber-attacks because once the hacker breaches the database, they have full access to it.
On the other hand, a decentralized crypto-friendly banking platform is built on blockchain technology where all the transactions are distributed on a ledger-where each block contains a timestamp and holds batches of every single transaction with a link of a previous block. This mitigates the risk of cyber-attacks and makes the platform secure.
To Sum Up
Decentralized finance is equipped to fundamentally change the world economy. With blockchain technology spearheading the front, decentralization is set to bring back privacy, trust, and let individuals create a future where a transparent, secure, public system is in control once again.
If you are also planning to build your own DeFi banking platform, Antier Solutions can help. Strengthened by the team of finance and technical experts, we provide complete solutions- from guiding on compliance, acquiring a bank license to providing a feature-packed white label banking ecosystem.
Schedule a free demo of our DeFi crypto-friendly banking system or connect with our subject matter experts to share your business requirements.
