Centralized and decentralized systems meet in the new world of finance
Combining regulated access to decentralized finance with mainstream, traditional banking and payments processes will unlock financial freedom and revolutionize global economies.
For many people, the global financial crisis in 2008 was a stark realization that traditional banking is broken. Built on old, inefficient, and slow technology, legacy banks are blighted by high operating costs, obsolete pricing models, and expensive cash handling. A system that deems negative interest rates on hard-earned money as acceptable is barely fit for purpose.
Despite the rapid rise of fintech startups following the financial crisis, if anything the traditional banking system has become more sluggish and fragmented, hellbent on protecting legacy revenue streams. It’s no wonder consumers have sought alternative options for trading and finance that don’t involve going to a legacy bank for loans, as well as alternative assets which diversify savings away from traditional stock and bond investments.
As is to be expected in an increasingly technology-driven world, digital assets are garnering particular attention. Decentralized finance (DeFi) enables users to not just store, exchange, and trade cryptocurrency assets but also earn interest on them, with rates as high as 19%, and lend or borrow against them peer to peer. With no need for intermediary financial third parties to govern and process transactions, it is more efficient and fluid as well as cheaper.
“There will be ever more ways to buy, trade, and sell digital assets,” says Brad Yasar, CEO of EQIFi, a decentralized protocol enabling DeFi and seamless cross-platform transactions. “Even financial institutions, historically slow to adapt, now clearly see the opportunity to hold and profit from alternative digital assets such as cryptocurrencies. However, we also need to see regulators be more nimble and responsive to these rapidly evolving opportunities.”
DeFi offers a way to democratize access to financial products that traditional banking and financing solutions have not been able to provide. But in a nascent market, in which regulators have been slow to adapt, digital asset consumers have faced limited options for securing custody and banking level access to assets. Demand is high for professional, secure, and convenient digital channels for their day-to-day banking activities worldwide.
A volatile economic climate over the past couple of years has opened people’s minds to DeFi-based banking and services even further, but while most regulators are no longer trying to deny DeFi, they have not been forthcoming with solutions for regulated access. Used to dealing with traditional financial institutions, they are not nimble enough for the pace of the DeFi markets, which is holding valuable products back from being mainstream.
One innovative company, however, is leading the way in bringing more transparency and accountability to the DeFi world. Optimized for real-time digital interactions, EQIFi is built to meet the expectations of consumers keen to embrace the evolution of digital technologies. Through blockchain technology, EQIFi democratizes financial products previously only available to the privileged few, delivering more products than other decentralized systems.
Crucially, EQIFi’s platform is not just secure in itself but it is the only DeFi project globally that is powered by a licensed and regulated bank, giving people the confidence and assurance to embrace the opportunities of DeFi. That bank is EQIBank, which has been recognized among the top digital banks to watch alongside the likes of Monzo and Chime.
“EQIFi welcomes regulatory oversight," says Jason Blick, CEO of EQIBank. "Measured, responsible regulatory oversight can only be a good thing for the industry as a whole."
A regulated and licensed global bank partnering with a DeFi platform is bringing forward the future of community banking, driving the shift from anonymous, high-risk DeFi platforms to safer, more transparent versions that non-crypto and non-technical people can benefit from. By bridging the gap between DeFi and traditional finance, the partnership will help unlock greater financial freedom as consumers can integrate digital assets into their everyday lives.
As well as being a decentralized protocol for pooled lending, borrowing and investing for digital assets, the single uniform platform offers access to EQIBank accounts, custody, debit and credit cards, OTC and wealth management. It solves the problems of negative interest rates and the yield on traditional banking products while giving those already in the DeFi space access to crypto-friendly digital banking. The result is one single marketplace for investors to access fixed and variable-rate lending products, and DeFi interest rate swaps.
Combining DeFi, crypto and traditional payment rails will usher in a new era of people-led finance. The future of finance is not centralized or decentralized – it’s both, in a single platform that consumers can incorporate into their everyday lives. Bridging the two worlds offers a fairer, more efficient financial system and will bring financial access to millions of the currently unbanked while forcing the traditional banks to increase their value to the public.
"DeFi currently attracts a relatively dedicated user base, but EQIFi is set to change that,” says Yasar. “The future of DeFi will include new, innovative tools like yield aggregators and interest rate swaps, integrated seamlessly with a licensed and regulated digital bank for the best user experience, such as EQIFi. DeFi is already affording wealth preservation and growth on an unprecedented level worldwide, outside of the outdated, archaic constraints of legacy institutions, and we fully expect this trend will continue and grow in the years ahead."
“We also expect to see DeFi evolve in other exciting areas. Democratizing more sophisticated financial products like interest rate swaps will be a game-changer. I anticipate seeing more bridges emerging between DeFi, regulated and licensed digital banks, facilitating the ease of access and use for people worldwide in the new world of finance.”
This article was originally published in the Cryptocurrencies report in The Times.