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- SCB 10X, the venture capital arm of Siam Commercial Bank, has indicated that it is prepared for the day when decentralized finance (DeFi) challenges traditional banking
- DeFi has been lauded as having the ability to eliminate financial middlemen by using smart contracts to execute code that regulates the rules between two counterparties once specific conditions, such as time, are met
- In order for this to happen, Panich believes that traditional financial institutions, such as ours, should actively research, invest in, and adopt DeFi
Siam Commercial Bank’s venture capital arm, SCB 10X, has stated that it is ready for the day when decentralized finance (DeFi) disrupts traditional banking. Mukaya Tai Panich, chief venture and investment officer at SCB, told CoinDesk via email on Saturday that DeFi offers everything traditional finance has today. Panich added that when they looked at DeFi, they felt that banks and other financial institutions may one day be totally disintermediated.
Credit/lending, asset management, insurance, trading, derivatives, and prime brokerage are all included, according to Panich. Disintermediation, often known as cutting out the middleman, is a phrase used in economics to describe the elimination of middlemen from a supply chain. DeFi has been hailed as having the potential to eliminate financial middlemen by utilizing smart contracts to run code that governs the rules between two counterparties after certain criteria, such as time, have been satisfied.
According to Panich, one way the bank was preparing itself was by investing very actively in DeFi in order to learn. The bank is also searching for potential industry partners as well as ways to integrate DeFi into traditional finance. Panich proposed that they would like to collaborate with DeFi protocols to address challenges in conventional finance, such as lowering operating costs, having real-time settlements, eliminating middlemen, and having a high level of transparency.
To that aim, the chief investment officer expressed optimism for a future in which conventional financial institutions collaborate with decentralized ones, citing traditional vast client base. Traditional financial firms would take up the slack on customer-facing operations like gaining clients and offering them a clear, easy-to-understand, and integrated interface under such a scenario. DeFi would then power the backend, allowing for faster transaction and settlement times, reduced costs, and greater transparency.
Panich mentioned that he believes conventional financial organizations, such as ours, should aggressively study, invest in, and implement DeFi in order for this to happen. At the same time, DeFi firms should seek partnerships with traditional financial firms to capitalize on their capabilities.
When asked what trends SCB is seeing in the industry, Panich informed that she is excited about the prospect of continued infrastructure development and cross-chain compatibility among current protocols. He explained that at the moment, many blockchains are tackling unique challenges inside their respective ecosystems. There are several inefficiencies because assets are primarily used inside the ecosystem and cannot be readily moved to another blockchain. Because of the many programming languages and consensus rules utilized, DeFi has had a lot of trouble getting multiple protocols to communicate with one another. Panich believes that resolving these challenges would enable more effective usage of assets and information across multiple blockchains.
The venture arm created a $50 million fund in February to invest in blockchain, digital assets, and DeFi businesses, focusing on global growth-stage companies that it believes will help define the next generation of financial services. To him, it’s always a good idea to invest in picks and shovels. In the previous year, DeFi applications have advanced at a breakneck pace, and now the infrastructure must be updated to keep up with all of these advancements.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
