Will DeFi replace brick and mortar banks?

New customer journeys are paving a path for digital retailers while the pandemic and fluctuations in
the global economy are accelerating the fintech revolution. Together they synergise and leave us
wondering, is this the end of traditional financial infrastructure?

As both, customers and businesses embrace digital convenience, fintech creates measurable growth
opportunities for entrepreneurs when other sectors assay to stay afloat amidst the COVID-19 outbreak.
With over 1 billion credit card transactions occurring daily worldwide, the growing pains of customers increase exponentially, breaching the trust between customers and central banking institutions. Digital influx made banking more mobile, eradicating the need for brick and mortar banks, by enabling customers the usage of e-wallets, and integrating the entire banking process onto one frequently used device – a phone. Yet, does fintech have what it takes to transform the system so intrinsically tied with the sovereign? Well, history shows that when it comes to adaptability and digital innovation, no one is immune.

Here’s how FinTech is set to disrupt traditional banking

The rise of Fin-fluencers:

The demand for fiscal intelligence amongst the younger generation is growing with the continuation
of the pandemic, shifting towards a generation of people with basic global financial understanding.
Accredited digital knowledge sources, specifically on social media channels, are now primary sources
of education and information for Millenials and Zoomers. These demographic cohorts prefer to gain
insights from someone they can relate to. The fin-fluencer wave highlights that emotional connection
fosters positive consumer behaviour.
The main communication channels for fin-fluencers are Instagram, Youtube, and TikTok. Fin-fluencers
gained media recognition during the COVID-19 outbreak when the social media content viewership
and the average time spent on SM platforms rose. For instance, the average time spent on TikTok
increased by 38% by 202. Their expertise and authority largely stem from their previous work
experience and academic backgrounds, with fin-fluencers hailing from globally accredited companies
on Wall Street and others.

Influencers are no longer only followed for lifestyle blogging and product endorsement while Gen Z
and Millenials are no longer reliant on corporations, academic institutions, and centralized banking
systems to navigate their finances. Making finances ‘cool’ for younger generations, fin-fluencers are
in a way a testament to the financial vision of the future generation.


Unbiased banking:

Unbiased banking addresses the needs of the minority groups and unbanked population. More
specifically, unbiased banking refers to Neobanks – digital banking platforms with seamless digital
banking solutions with low or no service fees. Customers that aren’t currently affiliated with a centralised bank are more likely to register with an unbiased banking system for its financial flexibility
and limited legal documentation requirements.
As a part of the GlobalCloudPayments™ financial ecosystem, IIZIPAY is a completely customisable
white-labelled neobank. Offering direct access to CRM data and consumer behaviour, IIZIPAY enables
users to use their crypto wallets to scan personal QR codes and access a range of blockchain-based
services. From monitoring buying behaviour and spending patterns, GlobalCloudPayments™ enables
businesses better connectivity to customers and maximise market potential.

Social media credit:

Unlike traditional credit scores, social media credit implements the trend in the digitalization of business processes to develop a diversified credit rating system that evaluates consumer’s credit rating based on social media statistics rather than depicting a consumer’s creditworthiness based on a number of open accounts, total levels of debt, and repayment history. Similar to unbiased banking, social network credit targets underserved minority groups and younger consumers. Eschewing from service
fees and significant interest, social media banking systems penetrate the potentially lucrative new
market of Zoomers.
Social media credit schemes can implement social media credit checks by temporarily linking social
profiles via QR codes and evaluating profiles for loan applicability. Convenient and engaging in
nature, this fintech segment drives behavioural change from a unique perspective.

Blockchain technology:

While facilitating the process of recording transactions, Blockchain also provides a transparent,
immutable ledger, compromising a detailed overview of all transactions from
end to end. Affiliated with bitcoin, blockchain technology is a key driver in decentralising the
cryptosystem by creating multiple nodes, each recording transaction data since its
origination. This creates a financial structure where no one within the network can alter the
held Information. Despite the blockchain’s current implementation across supply chains,
digital IDs, voting and real estate, the ledger’s secure, fast and irreversible system foster the
growth of decentralised financial structures across the globe.

NFTs – Non Fungible Tokens:

Simply put, NFT is a digital asset emblematic of real-world objects such as arts, in-game
items, visuals and music. Traded and sold on the web, such tokens quickly increased in popularity.
Commodifying assets that are not tradable with fiat accounts, NFTs are regarded as an alternative
method of transaction. In 2021, the NFTs global sales volume surged to $2.5 billion from $13.7
million in 2020.

Final thought

Fintech and DeFi encourage customers to refrain from all bureaucracy and intermediaries while
optimising their cash and payroll management and all-in-all reducing ATM operational costs that are
essentially ineluctable when dealing with big banks. Why spend more on legal enactments when you
can instead turn your financial resources into your working capital.
Yet even within the dynamic pace of financial technology, we shouldn’t completely write off banks
just yet. Central banks continue to ensure global economic stability. Fiat currencies are still leading
large transactions and partnerships. So what can brick and mortar infrastructures do to stay
1. Partner with transformative fintech companies.
2. Enable direct, transparent and secure transactions between businesses and their customers.
3. Create tailor-made 24/7 services.
4. Offer virtual interfaces powered by AI.
5. Limit transaction costs.
6. Enhance digital banking solutions.
7. Enable quick access to the desired cryptocurrency from the comfort of the banking app.

Author: Darya Shustova

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