DeFi is ready to create havoc in the Fintech

With DeFi or Decentralized Finance, millions of new users are now borrowing, lending, trading, saving, and doing more without any permission of the companies whose interests may not align with their customers or buyers. The DeFi sector is growing day by day constantly in terms of users and also total value. But this may also have an impact on the fintech industry. Scroll down to know more about it.

When thinking of the finance industry, fintech companies are the most innovative part of it. They have easy-to-use and sleek apps for better user interfaces which can be a troublesome challenge for the banking sector. But when it comes to the blockchain industry, innovative companies and their apps have been struggling to keep up with the growth of DeFi. Earlier the blockchain spaces were treated as something that can be ignored but now these start-ups have grown powerful with crypto's resurgence without engaging with Bitcoin until the beginning of 2021.

Most of the companies are still struggling to incorporate custodian solutions for their users to hold their digital assets. Fintech companies should not overlook digital assets; they should adapt to new technologies such as the internet with the rise of web 2.0. But the skepticism around DeFi is that fintech companies believe to move banks by offering a better user experience giving users more control over their finances. But what is to be understood is that their new competitor is not legacy banking but it is DeFi's bankless experience.

DeFi users can maintain whole and sole control over their assets at the same time having access to financial products and platforms that have significant advantages over their counterparts. Most of the decisions are taken by DeFi users such as trading a decentralized exchange, lending money through liquidity pools, storing the assets using private keys, or buying tokens, etc. The fury that we see these days with fintech and banking experiences are the outcomes of a growing realization that people cannot have any control over their financial lives.

With the growing movement, fintech's should understand why users want decentralized financial products. It is vital to know the reasons why users aren't moving onto Aave. In most cases, it is because they are not aware of how to get onto Aave. DeFi has various risks in terms of sudden volume shifts and market manipulation with the steady influx of liquidity. And so, developers have started to prioritize building strong protocols with good infrastructure rather than optimizing the user experience.

Giving access to DeFi is easy, but figuring out how to become DeFi credit when the landscape is changing is difficult. The users can hop in and out in DeFi but apps are not so, they can be in demand this month and may not be the next since users jump in searching for new opportunities. The other problem could compound as users demand access to apps on other blockchains, requiring diverse integration teams. To tackle this, fintech should develop a future-proof approach to become DeFi ready.

In this scenario, fintech can either become useful guides for its users as they enter DeFi, or look for themselves behind their competitors since the transition to more decentralized financial products continues altogether.