Bankex_Decentralized BaaS Model

- December 26, 2017

Bankex_Decentralized BaaS Model

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Decentralized BaaS Model

According to McKinsey & Co., there are 3 main trends in banking evolution:

automation;
inflated regulation;
inflated pace of technological development.

Blockchain permits to automatize completely different processes and banks will get pleasure from it lots. Accounting, legal and risk elements may well be automatic. McKinsey & Co. states that blockchain, supported advanced cryptography, might enable doing such operations within the most effective, safe and clear approach in human history. For international players, adaptation to such trends can become an important issue. increased financial regulation can force participants to use partner BaaS platforms as the adaptation to new jurisdictions independently can become prohibitively expensive.

Fast technical school development, that several of the banks can’t handle, can drive banks interest in victimisation different fintech companies’ services. it'll drive a requirement for BaaS usage. Decentralized BaaS is that the way forward for banking. Why? the globe has modified and monetary streams are getting international. they're not easily controlled by common tools. Regulators and central banks, shaping the movement of the market, are responding to the current with a lot of strict rules. In turn, banks respond by making as several service offerings as allowable by their license on the far side their confines. They aim to form innovative services, leaving only themselves with simply the core. This trend creates the danger of a bank evolving into something a lot of the same as a telecommunication company — an organization with a license that not sees

it's clients.

At BANKEX we have a tendency to see this risk, however, believe it's right for banks to preserve the standing of the foremost necessary key component of the world’s monetary system. Fintech and IT corporations mustn't be disrupters of the industry. Instead, they must supplement one another with an exceedingly dependent method. Several years agone, banks and innovative technologies existed on an individual basis, with banks expressing associate interest in external IT product like bound separate features. these days the market has modified, leading banks of the globe work additional and additional closely with fintech corporations, whereas the fintech corporations, in turn, ceased to envision themselves as disruptors triumphing over banks and instead read themselves as partners to banks. everybody acknowledges that offline bank departments can stay, even though no one goes to them, as foundations of religion within the system.

A client should perceive that the monetary service he receives is that of a bank, the bank really exists, it's a department within the town, to that the customer will move into the case of a problem for help. This reason a minimum of can stay. This isn’t simply a domain which may shut tomorrow and leave its finish client alone with their issue. On the opposite hand, fintech and blockchain corporations acknowledge that the market share occupied by their product is just too little, below 10%, and so as to amplify it, they must partner with banks.

In different words, fintech product should find you at banks. Clients, in turn, can purchase and use the innovative financial product rather more volitionally if they can do therefore below the whole of a well-known bank. It’s worth noting that some banks can stay skeptical about integration with fintech corporations. Luckily, the banking community understands that fighting innovation will solely lead to market share loss. On the opposite hand, FinTech innovation alone is not ample to soak up the outrageous dealings flows and Brobdingnagian monetary streams. One rationalization is that banks don’t trust each other and they don’t trust technological corporations. They are afraid of losing their client-base by partnering with a stronger or additional technologically advanced player.

They are involved that upon shut examination their products won't be competitive compared to alternatives. They are afraid regulators would penalize them to be used of innovations in their base product. Another vital note is that selections relating to such risks square measure created by top-managers, most of whom are a lot of involved with protective their name than introducing innovation.

Technological progress has given the North American nation with solutions to such problems organizing mutual trust of participants within the system and trust in operations in the system supported decentralized information storage and automated smart-contracts. Many skilled market players admit that a decentralized BaaS business-model is the associate optimum path to collaboration between classic banks and money companies with leading-edge IT firms and regularly growing decentralized technological firms of the longer term.

Front service of purchasers remains in the hands of the banks, whereas product square measure given by narrowly-oriented product banks or firms. We believe that the B2B2C combination of business models and technologies is that the key to BANKEX’s success.