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Decentralized finance is revolutionizing the traditional banking and finance sector by providing greater security, speed, and operational efficiency. DeFi aims to democratize finance by replacing legacy, centralized institutions with P2P relationships that can provide a full spectrum of financial services, from everyday banking, loan, mortgages to complicated asset trading.
A new decentralized banking security system challenges the centralized one by disempowering middlemen and empowering people via peer-to-peer exchanges.
Today, most banking platforms are taking interest in this cutting-edge technology because transactions through the DeFi system eliminate the possibility of human error and protect data from tampering.
The benefits of a DeFi banking system:
1) Easy & Fast KYC (Know Your Customer)
As per the recent survey, financial institutes across the globe spend $60 million to $500 million per annum to keep up with the KYC to comply with diligence regulations every year.
The DeFi banking platform reduces the need for user KYC each time they visit an online banking platform to access financial services. Blockchain would allow independent verification of one customer by one company that can be further accessed by other companies so the KYC process wouldn’t have to start over and over again.
2) Reduction of Cyber Crime and Fraud
Developed on blockchain technology, the decentralized finance banking platform has the potential to eliminate fraud in the financial market. Generally, most of the crypto banking platforms across the world are built on a centralized database. It makes them more vulnerable to hack because once the hackers breach the database, they have complete access to it.
On the other hand, a decentralized crypto-friendly banking platform is built on blockchain technology where all the transactions are distributed on a ledger. In the ledger, each block contains a timestamp and holds batches of every single transaction with a link to a previous block. This reduces the risk of cyber-attacks and makes the platform hack-free.
3) Elimination of Third-Party Involvement with Smart Contract
Smart Contract is a specially designed algorithm that executes automatically when predetermined conditions are met. These contracts enable users to buy/sell assets like properties, exchange shares, money, proprietary, and documents. One of the most important features of a smart contract is that you won’t need to have any central authority such as agents, brokers, notaries, etc.
To Sum Up
Decentralized finance holds the potential to fundamentally transform the world’s financial system. With blockchain technology spearheading digital finance, decentralization is set to offer better privacy, trust, and let individuals create a financial system that is transparent, secure, and puts people in control of their transactions.
If you are also planning for DeFi banking platform development, Antier Solutions can help. We offer white label blockchain banking software that provides complete digital asset banking solutions – from user onboarding, borrowing and lending to the issuance of credit and debit cards, and more. In addition to white label development, we are recognized for building a custom crypto-friendly banking ecosystem from scratch.
Schedule a free demo of our DeFi crypto-friendly banking system or connect with our subject matter experts to share your business requirements for a custom banking ecosystem.
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