IPFS DeFi & FinTech Banking Reality Check
FinTech poses serious and frightening challenges for the enterprise banking and financial industries.
To start, Fintech, the nimble young competitor of traditional legacy-banking … is fast; lightening fast compared to old-style enterprise banking that is constrained by centuries of antiquated regulation and decades of outdated enterprise applications and latency. The speedier fintech is also more secure than legacy banking networks, and considerably more cost effective. When you incorporate tools like blockchain and IPFS into the enterprise equation and across a variety of industries like health care, it can generate cost savings of up to 80%.
The history of banking goes back to 2000 BC in India and surrounding regions. Some of the banking and finance rules developed back then still apply today. In part it’s a good thing because it fosters stability, but just like other industries, old rules often act as an anchor when you’re striving to improve efficiencies, and that’s what the banking business is all about right; reducing costs and providing a better service to clients and customers. As the banking industry became more efficient customers were happier, and as importantly, profits increased.
Fintech offers new niche banking services that cannot, in any way, be delivered through the old banking system’s centralized networks and protocols. Fintech, at its core, can be seen as anything to do with financial technology innovations. The new kid on the block these days is something you might have heard before “DeFi” an umbrella of fintech; however, the issue today is DeFi is nowhere near what people think or expect. The argument can be made by many as to defining what is considered decentralized in this new DeFi world. Is the blockchain being used truly decentralized? What about oracles? The off-chain data? Is there a place for anonymity? And, so on. The reality is DeFi will be a combination of Web 3.0 technologies solving these types of issues and not just the blockchain. IPFS, for example, is going to be the key player to decentralize and archive big data that is not possible to go on-chain and, still keeping true data integrity while cutting cost.
IPFS, via distributed decentralized networks, blockchain or not, and through turn-key plug-and-play APIs like Temporal, can however deliver services to customers anywhere, many who have never had access to any type of banking service. Large banks still don’t adequately serve many developing countries, mainly because infrastructure is too great of an investment. Customers would not be able to afford the fees associated with a banking enterprise built on bricks and mortar. With finfech however, all a customer needs in order to conduct safe, fast, and affordable banking is a smartphone. That’s it, just a smartphone and an ID, and customers in developing countries can easily access any level of banking and financial services they require.
FinTech changes basic banking rules, one of the toughest challenges for executives and directors in the banking and financial industry is that they have to move cautiously. A primary tenet of banking is to act conservatively and instill trust. The hard part, which inherently is always a risk, is to know when to inject change into what appears to be a well oiled machine. Many CEOs operate under the “if it ain’t broke don’t fix it” mantra because it is safe. Unfortunately, nothing in banking is safe anymore, and fintech proves it every day by offering improved and more cost-effective ways to do old things. Plus, and this is a big plus, fintech advances like IPFS and blockchain deliver new ways to do new things.
Innovation is the fuel that keeps industries moving forward.
And Today … no one can afford to be complacent.
Good CEOs aren’t hired because they follow. They are valued because they are leaders who take us to new places. Great leaders do it safely and improve the bottom line.
The realty; Enterprise networks no longer have to be large and styled only for mega sized corps. Small enterprise networks can now be streamlined and automated to return highly effective cost efficiencies. It is now feasible for any size company to be a banker, and to be profitable by offering niche services that bigger intuitions won’t and often can’t deliver.
The same explosive growth occurred when the internet came online with HTTP, a protocol that outlived its usefulness many years ago and needs to be relegated to history books–digitally of course — The king is dead, long live the new data king and fintechs glorious path forward. However, there is a very bumpy road ahead for DeFi technology and products like DeFi ICO’s. When adoption and DeFi systems start emerging, this will follow by suffering immensely in the early stages due to an oracle hack, smart contract bug, and regulators trying to bring it down. The ups and downs are all part of learning and growing for any emerging technology. With new advancements in blockchain and IPFS we can now minimize these risks much more. The future is bright and filled with better, cheaper and faster financial services enabling more and more users than ever before.
We’ll be diving deeper into Niche Banking in Part 2 of our FinTech series next week, but in the meantime if you’re not exactly sure what IPFS or Temporal are, and how this new style of the distributed web is changing the internet as we know it, take a look at the description from zk Capital. If you still need more information please contact us here …
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Written by Maurice Cardinal
