There was a time when people move together physically with their wealth. But since safety was often compromised, banks began to emerge guaranteeing security in wealth storage and issuing receipts and banknotes that owners carry around to transact with. Banks as wealth protectors that owners trust faded away a long time ago.
Today, banks have a lot more to handle than just peoples’ money. The global financial and economic trends made them highly participative that personal attendance to customer needs have taken a back seat.
As we allowed our money to be controlled by the big banks, they have now become busy on how to use our personal funds for vested interests.
We can say the same with big tech companies who handle a huge accumulation of personal information, money trails, habits, and lifestyles, called big data. They are out to profit from it.
How can we provide a solution then wherein the customer will have control back over their money and personal data? Challenger banks were designed to niche special services to readily respond to customer queries, to little effectiveness. The ability to control one’s finances and personal information without giving up banking services and safeguards might be resting on self-sovereign banking. Decentralized finance, meanwhile, proposed a total exclusion from banks.
After the global financial downfall in 2008, Bitcoin bannered the ushering-in of the DeFi movement. With centralized entities colossally messing up with our funds and, consequently, our financial future, consumers have awakened to the fact that they needed to take control of their money since they own it anyway and to be able to do whatever they want with it.
DeFi has made good its promise to take back funds and data from legacy institutions with the emergence of cryptocurrencies and various DeFi services. With a ‘customer-first’ vision, we are looking at a future of money transfers across borders barring no restrictions, fast and cheap transactions, and the elimination of intermediaries that reflect banking.
But the unfolding of the future requires that the foundational values must already be set up today. Even with the utopian ideas espoused by DeFi are realities at hand, it does not sink that easily into the general consciousness. The result is that many people still hold on to traditional financial mechanisms. They feel secured going through the default processes of having cash and paying over the counter. They fear the unknown — crypto.
If that be the case, self-sovereign banking then should go beyond crypto without sacrificing banking services and consumer protection. Practical purposes should allow stablecoins part of the system. While equal in value with the fiat that people value, it can travel the DeFi highway of interoperabilities anytime at anywhere in the world fast and cheap. Conversion from fiat to crypto or from crypto to fiat will close the gap between these two different worlds. With individuals enjoying the benefits of usual banking services, stablecoin accessibility, data control, and regulation protection, self-sovereign banking may just be the timely solution for customer-focused service.
Self-sovereign digital identity is the power individuals have that they alone have control over their data and not corporations or consortiums. To team it up with self-sovereign banking would be an empowerment never before experienced by the customer. It will allow an individual to maximize its decentralized potential to access and finance a range of lifestyles such as business, travel, entertainment, government service, insurance, eCommerce, health, etc. It can also be added to apps and devices. Only because these innovations put the customer first above all else, having full control over their own money and data.