SCB 10X, the venture capital arm of Siam Commercial Bank, has announced that it is equipped for the day when decentralized finance (DeFi) replaces traditional banking.
SCB’s chief venture and investment officer, Mukaya Tai Panich, told CoinDesk via email on Saturday that DeFi can do almost anything that traditional finance can do currently.
Panich and his colleagues arrived at the notion that commercial banks may be disintermediated entirely in the future after studying DeFi.
According to Panich, credit/lending, asset management, insurance, trading, derivatives, and prime brokerage are all included.
The process of taking away the intermediary is known as disintermediation. It enables a customer to purchase directly from a wholesaler rather than via a retailer or a company to order from a manufacturer rather than through a distributor.
Disintermediation in the finance sector is when an investor buys shares without going via a broker or a financial institution.
According to Panich, traditional financial businesses, such as SCB 10X should aggressively research, invest in, and implement DeFi. At the same time, DeFi firms should seek opportunities to collaborate with traditional financial firms to capitalize on their respective capabilities.
DeFi has been hailed as having the potential to eliminate financial intermediaries by utilizing smart contracts to run code that governs the rules between two counterparties after specific criteria, such as time, have been satisfied. As a result, DeFi saw rapid growth in 2021, and the entire value of DeFi surpassed $100 billion.