Before I begin my discussion today, I would like to start by saying that the impact of decentralized finance (DeFi) on traditional banking is multifaceted. That is, DeFi's offer greater transparency, efficiency and accessibility than traditional banking systems. It allows for peer-to-peer lending, borrowing and other financial services without the need for intermediaries. This could potentially erode traditional banks' market share and profitability, particularly in areas where they are slow to innovate. But just as Defi creates several opportunities for traditional banks, it also brings with it some challenges. They can integrate DeFi technologies into operations to offer new services and improve efficiency. Here banks can collaborate with DeFi platforms to enhance their existing offerings or access new markets.

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Well, here we will discuss this topic in a little deeper detail where we will have 5 main points. namely-

1. Disruption.
2. Access and Inclusion.
3. Cost reduction.
4. Innovation and competition.
5. Regulatory Challenges.

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1. disruption -

Here financial transactions and services are facilitated as traditional banking involves intermediaries like banks. Here the DeFi protocol built on blockchain technology aims to eliminate these middlemen by using smart contracts to automate transactions. It facilitates transactions by reducing the need for banks to manage assets and provide loans.

2. Access and Inclusion –

DeFi platforms can reach people who do not have access to traditional banking services due to regulatory, geographic or socio-economic barriers as it operates globally and is accessible to anyone with an internet connection and a compatible device. Individuals in underserved or emerging markets choose DeFi platforms over traditional banks because it can lead to a shift in market share.

3. cost reduction -

Traditional banks typically have significant overhead costs associated with physical branches, infrastructure, and compliance. Also DeFi platforms often operate on decentralized networks with low operating costs. As a result we see this may attract customers away from traditional banks due to lower fees for users and more competitive interest rates on savings and loans.

4. Innovation and Competition –

Here DeFi allows rapid innovation with the creation of new financial products and services due to its open-source nature and permissionless architecture. Not only can this innovation drive competition in the financial industry, but it also pushes traditional banks to evolve to meet changing consumer needs and adapt. It also presents a challenge for banks to compete with DeFi platforms and keep pace with innovation

5. Regulatory Challenges –

Here the decentralized nature of these platforms presents unique challenges for regulators as the regulatory framework for DeFi is still under development. But traditional banks may not be directly applicable to DeFi platforms because traditional banks are subject to strict regulatory oversight and compliance requirements. That said, navigating regulatory compliance in the evolving DeFi landscape can be tricky for both DeFi projects and traditional banks.

That is to say that the latest I would like to say is that DeFI has the potential to disrupt traditional banking by providing greater access, lower costs and increased innovation in financial services. Also the need for traditional banks to adapt to changing customer preferences and regulatory challenges and competitive pressures pose significant challenges to the status quo.

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So friends, that's it for today. Let me know in your comments how you like today's topic. I am ending here wishing everyone good health. All be well and stay healthy.