IBM’s director of financial services and digital assets, Nitin Gaur, shares how technology companies can help financial institutions take advantage of DeFi.
Gaur – the author of Blockchain for Business – says that banks must understand and embrace the DeFi space. Otherwise, he says it could end up disrupting their entire business model:
“In my opinion, financial institutions should understand it because in the end it has the potential to take over and eliminate business elements from the existing business model. And that’s one of the reasons why banks should do it. “
said Nitin Gaur
DeFi presents a series of regulatory challenges to financial institutions and IBM believes it can help their clients navigate them. However, most financial institutions are still in the early exploration stages when it comes to DeFi, and are stuck at a crossroads between true decentralized finance and simply digitizing traditional securities. Regardless, Gaur foresees the entry of “big banks, starting with investment banks”.
Need to rethink
At the same time, he acknowledged that for banks to be successful in this area, they would need to rethink their approach. It’s not enough for them to just make a few DeFi products. Their true value will only be revealed if they embrace the global nature of the blockchain network.
He said IBM wants to help connect banks, “into the dynamics of the global market that the DeFi space has to offer, not to mention innovating into products, creating new competing products, and creating some sort of add-on.”
While it’s unclear when we’ll see major banks enter the DeFi space, Gaur mentions that Goldman Sachs hiring a new digital asset head is a positive sign.