Banks Should Embrace Their Inevitable Digital Future
Deloitte, one of the “Big Four,” polled financial executives as part of its 2021 global blockchain survey, the results of which suggest a transition to digital assets is inevitable.
A total of 1,280 executives and practitioners were interviewed for the survey between March 242 and April 10, with a total of 10 sites represented: Brazil, Mainland China, Germany, Hong Kong SAR, Japan, Singapore, South Africa. South, United States United Arab Emirates, United Kingdom and United States.
According to the study, 76% of respondents believe that digital assets ‘will serve as a solid alternative or outright replacement to fiat currencies over the next 5-10 years’, which would be a sea change in financial services .
The report also shows that 81% of all respondents agree with the idea that the technology is “largely scalable and has achieved widespread adoption,” with 96% of all pioneering the financial services industry of agree with the statement.
The top 5 roles played by digital assets in organizations represented by respondents shows that custody of digital assets is most important (45%), followed by new payment channels (42%), diversification of investments ( 41%), access to financing platforms (39%) and tokenization of assets (39%).
Key challenges of digital asset adoption
While the attitude towards blockchain of financial experts surveyed by Deloitte is positive, most agree that there are still great challenges to overcome for digital assets to be accepted and used at scale. global.
While the lack of regulatory regulation was seen by many as one of the main obstacles to adoption, regulatory barriers were seen as the main obstacle by 63% of experts. Cyber security concerns top the poll with 71%, while existing financial infrastructure was in third place with 62%
Cyber security concerns are not surprising at a time when security breaches have taken place in several projects and networks, as cryptocurrencies become more and more attractive to malicious hackers.
On the regulatory front, the report shows that the most important changes to be made for mass adoption in the financial industry are in data security and privacy, industry specific regulations and internal controls / financial reporting.
Interestingly, while the Securities and Exchange Commission (SEC) has taken several actions against cryptocurrency projects, securities laws were only cited by 37% of participants as one of the most important concerns. urgent.
Is crypto the future of banking?
Overall, the report shows that financial institutions see digital assets and their underlying technologies as an increasingly strategic priority that cannot be ignored, with 73% of respondents believing their organizations would fall behind if they were not adopting blockchain technology.
Linda Pawczuk, Director, Deloitte Consulting LLP and global and US leader in blockchain and digital assets, spoke of this trend, saying:
“Over the past year, we’ve seen a significant shift in the way the global financial ecosystem thinks about new business models powered by digital assets, and how this plays a significant role in financial infrastructure. Deloitte’s Global Blockchain Survey 2021 shows that the foundation of banking has fundamentally been overtaken and that players in the financial services industry need to redefine themselves and find innovative ways to create economic growth in the future of money . “
With the adoption of blockchain technology and daily growing digital assets, decentralized finance has become a concern for traditional financial institutions.
Failure to reinvent itself by offering services for the acquisition, trade and use of cryptocurrencies could be catastrophic for organizations that have historically not experienced strong competition.
An even greater risk for legacy financial institutions is DeFi.
DeFi has created an alternative interest rate fixing system by offering stake rewards for major tokens. While central banks are capped at zero, DeFi allows investors to earn 10% per year on their holdings, or even more.