With the emergence and growing popularity of DeFi in the crypto market, it will not be wrong to say that DeFi will soon kill the retail bank. After all, why would people not want to go for an option that is better, faster, and cheaper? For all the consumers around the world, the monetary system runs through their retail banks. This is the place where they all save, spend and pay their taxes as well. We cannot forget the fact that this world runs because of consumer spending and saving and these everyday people are the reason who powers the most vital parts of our economy and the financial systems.
We all know that money is the power of the purse and DeFi is all about it. DeFi and retail banks both will be fighting for global consumer deposits. This will intrinsically change the world than the internet has already done.
Retail banks give the worst interest rates possible; they charge us for even small mistakes and keep us on phones for hours. And to top it all, they provide us with a user experience that escalates our aggression even more. This is why people have really started to hate these banks and now are unconcerned about them. Organizations like these always resist the change rather than accepting it. However, this is not always the fault of the bank. There are a lot of consumer controls and regulations that the banks have to comply with. Due to this, compliance has become the most expensive center for these banks.
Window Of Opportunity
In retail banking, we always had to trust people with our money. It definitely costs us an arm and leg to trust someone. However, in DeFi, we have to trust the code behind it that will provide us our financial services. Besides that, DeFi has delivered a new world of financial products and opened the doors to many irresistible opportunities. It is not just better than the retail banks; it is purely different than that.
There are several protocols such as MakerDAO, Uniswap, and Aave that can directly control financial assets such as Ether, wrapped Bitcoin, USDC etc. This gives rise to the financial products that can run 24/7 a day for the entire year without the requirement of any staff. It not only removes the cost of balances and checks but also turns handcrafted financial processes into automated programs. DeFi allows the consumers and entrepreneurs to switch between different providers in just a few seconds with a click of a button. Additionally, it requires zero paperwork and zero cost of switching. This thus offers them a great opportunity to compete in this world of global finance.
Another important thing is that capital in DeFi can instantly turn into the best value opportunities providing real competition and real innovation to global finance. For example – Why would you want to keep your money in a bank when you can get a 10% or a 15% annual percentage rate in your favorite DeFi savings decentralized application? This is the reason why DeFi will kill the retail banks soon.
Threats On Every Step
You need to know that not everything is going well in DeFi. It has seen almost about $285 million in hacks. Ethereum is congested to use and is very expensive. Even all the rewards in Ethereum are not shared on an equal basis. We have to trust a code in DeFi and not a human. It doesn’t matter how many people use DeFi, it should never be congested. After all, the community is an inevitable part of success. We still dream of a decentralized network where developers don’t constantly threaten hacks and exploitation during development. We want a decentralized network where scale will never be the congestion point and where each improvement will be rewarding to us. When all this will happen, only then we will be able to see the retail banks vanishing and great consumer finance will make an appearance