Is DeFi The End For The Traditional Bank As We Know It?

The last year has seen a major shift in consumer attitudes towards the mainstream financial world. In light of the COVID-19 pandemic, more and more people have seen traditional institutions struggle to adjust to the new way of life and many turned to the digital world to hedge their bets, store their wealth, and explore other investment opportunities.

One of these has been decentralized finance, or DeFi as it is popularly called. DeFi essentially offers consumers many of the same services and products as traditional financial institutions but without a middleman.

The Magic of DeFi

While it might seem simple, DeFi offering banking products and services without a middleman but instead leveraging smart contracts and blockchain is actually revolutionary. First, it means that several fees associated with middlemen services are cut out which benefits users and reduces barriers to entry.

Additionally, it means that the margin for human error is reduced and users can maintain a higher level of privacy. DeFi platforms that offer rewards for staking tend to offer higher interest rates than even traditional banks and when loans are procured on DeFi platforms, lower interest rates are recorded.

In terms of trading tokens and custodian services, many more people are becoming accustomed to the standard set by DeFi, and with billions of dollars now locked on DeFi platforms, the question arises of whether retail banking as we know it will continue to survive.

Jason Blick, Chairman of EQIFI, is uniquely placed to answer many of the questions surrounding DeFi and how it could change the face of finance as we know it, as he is also CEO of EQIBank, a licensed digital bank. Commenting on DeFi signalling the end for traditional banking as we know it, Jason said “we consistently hear about DeFi being a threat to what we call “traditional banking,” but that couldn’t be further from the truth.

“DeFi, and the benefits it brings to the industry, is an opportunity rather than a threat. Don’t get me wrong, it very likely troubles those who are slow to adapt and reluctant to accept change. But EQIBank, as a licensed, regulated digital bank, sees DeFi as the next step in providing our customers with the type of financial services they deserve.

“Is DeFi the end for traditional banking as we know it? Yes, I believe so. That does not mean it’s the end of traditional banking, though. Those banks prepared to move with the times will thrive and grow. Those unable or unwilling will face problems. This is the same for any industry, though, and isn’t a problem exclusive to finance.

“You grow and adapt.”

After all, if DeFi, a concept that has worked to be as globally accessible and convenient to use as possible, is gaining popularity, what chance does the traditional financial sector, which has mostly remained stuck in its ways, have to survive? What will the future of finance look like when DeFi is doing everything the previous system did, but cheaper, safer, and more convenient.

How EQIFI is Changing the Landscape

While DeFi is essentially on track to compete with traditional banks, one platform in particular is actually backed by a licensed, regulated bank. This project is EQIFI, which is powered by EQIBank, a licensed and regulated Bank, making it the first of its kind. EQIFI offers many traditional financial products with a DeFi twist and thanks to its connection with EQIBank, its customers can enjoy the best of both worlds.

Not only are the usual DeFi offerings like staking and custodian services enjoyed by EQIFI users but those who hold the platform’s EQX token can apply for accounts with EQIBank, subject to conditions.

What EQIBank and EQIFI are doing shows the current trajectory of the DeFi space; a world where consumers do not have to immediately abandon the traditional banking market for DeFi entirely but have seamless access to both of them. DeFi is the next step in the evolution of finance and banks like EQIBank are working to bring these services to their clients.

Over time, the DeFi space will become too big to ignore, and even more, beneficial products will be put forward for the good of the community. This was the driving factor for the suite of EQIFI products due to be released in early August, according to Blick: “at EQIBank, our primary concern is the service we provide for our customers. Once we realized the undoubted benefits DeFi offers, we knew we had to be part of it. Being the first licensed, regulated digital bank to power a DeFi protocol was that opportunity.

“While many banks are shying away from advances such as DeFi, and pretending that it either doesn’t pose a new set of questions or even exists at all, EQIBank has done what it always does: recognize an opportunity to further enhance the banking experience for our customers, and grasp it with both hands.

“We’re excited to be backing EQIFI as it strives to change the way we look at finance in the modern world.”