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Banks: The Problem of Centralization
The next generation of NeoBank on Blockchain
The banking system concentrates and dominates all economic activities. They determine which people or companies will have credits, which interest rates will be applied, who can win with investments, making it difficult to access thousands of people to the financial market.
Even with the internet, the most recognized banks have failed to adapt to the new era, and are compared to what telecommunications networks were in the past. With high fees, bureaucratic processes, no flexibility, lack of innovation, investment products with low profitability and uneven services, they have lost the connection between what they offer and what their customers need and want from a financial institution. This gap opened the way and an opportunity for innovation on the part of fintechs and Challenger Banks.
According to the result of the idwall 2020 survey, 75.3% of traditional bank customers are willing to replace them with a Challenger Bank and 80% prioritize the digital environment for opening an account.
The users’ needs are putting pressure on innovation within the traditional system. It is in this scenario that Open Banking emerges, with the purpose of simplifying data portability, giving customers the freedom to take their financial information to any institution. This sharing brings more competitiveness to the traditional banking system, allowing customers to gain autonomy and use their data for their own benefit.
With Open Finance, the opening of relationship data, brokers, investment companies, investment funds and fintechs will have access to customers' banking history and will be able to offer their products, giving people the opportunity to choose the best benefit. It will increase the range of options and allow a positive disruption in the banking market. A more open financial system will even benefit from investment offers by increasing the alternatives available on the market and making a new class of assets available to investors.