The advent of decentralized finance (DeFi) supports the rise of a community-powered global banking system. This is a great leap in advancing permissionless processes for global banking and other cross-border financial services. Before now, most digital asset consumers have grown accustomed to the limited options available to them regarding banking services. Customers need professional, secure, and seamless digital channels for their banking activities globally.
The DeFi market value rose from $1 billion to $13 billion between June and December 2020, and $93 billion in March 2021. The unending inconvenience experienced by customers in the global banking space has made “democratizing finance” inevitable. DeFi is here to bring back public trust in the global financial landscape. It supports a system of community-powered global banking where individuals will be in charge of their finance. By leveraging DeFi and blockchain technology, companies are building financial systems that allow users to manage their finances.
Aside from the public distrust in the traditional banking system, multiple problems have bedeviled the industry. Most of the financial products available on traditional banking systems are only available to the privileged few. A system that makes pooled lending, borrowing, and investing available for everyone is revolutionary and will certainly turn the tides in the global banking industry. This is why people have been clamoring for a global banking system that is community-centric. Here, the consumers and users control the affairs of the system and not some corporate entities who care only about making profits. Some of the problems facing traditional banking systems include:
- Excessive fees
- High cost of cash handling
- Underserviced global market
- Susceptible to human error and fraud,
- Slow and high inefficiencies, etc
A Use Case Of Community Powered Global Banking
On April 6, 2021, EQIBank announced that it had, in partnership with Beyond Enterprizes, launched EQIFI, a global decentralized finance alternative to traditional financial services. By leveraging the potentials of blockchain technology and DeFi, EQIFI is on track to become an industry leader. Using its DeFi products, the platform democratizes financial products that were only accessible to the privileged few in the past.
According to the Chairman of EQIFI, Jason Blick, “DeFi is easily one of the most exciting developments in the financial sector in a long time, and a fundamental challenge to modern finance. However, there are some issues those within the space are facing, including, for example, siloed operating models, legacy technology, and low liquidity. The answer is a global debt marketplace for both borrowers and lenders with real-world safeguards, access, and bridges.”
The EQIFI platform is a decentralized protocol designed to enable pooled lending, borrowing, and investing. According to a report by AlliedMarketResearch, the global peer-to-peer (P2P) lending market size is expected to reach $558.91Bn by 2027, rising at a CAGR of 29.7% between 2020 and 2027.It offers a single and uniform platform for DeFi products. EQIFI also provides access to bank accounts, custody, OTC, debit and credit cards, and most importantly, wealth management. The infrastructure is built to provide users with real-time digital interactions. EQIFI community-powered global banking platform aims to revolutionize the traditional banking system through:
- Fixed-rate products: These are pooled loans with fixed interest rates. Here, the user will provide collateral like ETH, wBTC, stabelcoins, or a selected fiat currency.
- Interest rate swap products: These are DeFi forward contracts where a user can exchange a stream of future interest payments for another. It usually involves the exchange of a variable rate for a fixed rate or vice versa. This is done to increase or reduce exposure to fluctuations in interest rates. It helps to reduce the volatility of variable rate lending and some money market products.
- Yield aggregator: It makes yield farming simple and automatic and accessible to users familiar with DeFi and yield farming. The product is also designed for users entirely new to the sector.
The concept of community-powered global banking is revolutionary and has the potential to transform the global financial system. With the recent launch of EQIFI, only a matter of time before more like projects hit the market. This further exposes the huge potential of DeFi and blockchain technology in the financial sector.