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Nitin Gaur, the director of IBM Financial Services and Digital Assets has revealed that the technology company is currently assisting financial institutions like Banks to capitalize on the Decentralized Finance (DeFi) protocol.
Decentralized Finance (DeFi) is simply a system or protocol built on the blockchain technology (an example is Ethereum Blockchain) which eliminates the need for human middlemen by replacing them with smart contracts. It is a financial software built on the blockchain with the aim of extending the benefit of Decentralization to the banking space and other financial sectors.
“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.”
The decentralized Finance (DeFi) might present regulatory issues or challenges due to its decentralized protocol, IBM believes they can help Banks deal with these regulatory challenges and should be able to help them navigate through it.
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Gaur acknowledged the fact that Banks cannot succeed by simply creating a DeFi token alone, they would need to understand fully what the overall blockchain technology is all about and how the network works. They had to consider their approach and IBM was 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.”
