In a Cointelegraph interview, director of IBM financial services and digital assets, Nitin Gaur, shared how the technology company is helping financial institutions to capitalize on the DeFi movement.
Gaur — the author of Blockchain for Business — says it is essential that banks understand and embrace DeFi space. Otherwise, he says it could eventually disrupt their entire business model:
“I think that the financial institutions should understand it because it has the potential to eventually sort of take over and subside the business elements of existing business models. And that's one reason why a bank should do it.”
DeFi presents a set of regulatory challenges to financial institutions and IBM believes it can help their clients navigate it. However, most financial institutions are still in early exploratory stages when it comes to DeFi, and are stuck at the crossroads between true decentralized finance and just digitizing traditional securities. Regardless, Gaur foresees an entry “of the large banks, starting with investment banks.”
At the same time, he acknowledges that in order for banks to succeed in this space, they would need to rethink their approach. It is not enough for them to just create some DeFi products, the real value will only be unlocked if they embrace the global nature of the blockchain networks.
He said IBM wants to help connect banks, “into the dynamicity of the global marketplace that the DeFi space has to offer, not to mention the innovation into products, creating new competing products, and creating sort of add-on products.”
While it is unclear when we will see major banks enter the DeFi space, Gaur mentioned that Goldman Sachs hiring a new head of digital assets is a positive sign.