KEY POINTS
- Web3 tech helps inspire neobanks to think outside the box of traditional banking: Brighty app CTO Nikolay Denisenko
- Mass crypto adoption requires user-friendly platforms and better consumer education, Denisenko said
- Blockchain's maturity will lead to a "convergence" of traditional finance and crypto services
The vast world of blockchain and cryptocurrencies has brought forth a new breed of developments in the financial system that consumers will find more attractive than traditional finance solutions, and neobanking, an emerging subsector, could play a major role in driving crypto mass adoption.
What is a neobank?
Neobanks are sometimes called "challenger banks," but are actually fintech (financial technology) firms that offer solutions to streamline online and mobile banking. They are digital-first providers that offer various services, but unlike online banks, do not have a bank charter.
A hybrid future for the banking system
The rise of cryptocurrencies paved the way for neobanking to emerge as a major player in innovative solutions for crypto users. For instance, all-in-one finance app Revolut offers a crypto-feature section where users can buy and sell various tokens. After all, neobanks are supposed to merge traditional finance with crypto support.
Nikolay Denisenko, the co-founder and CTO of financial and earning app Brighty app, exclusively shared with International Business Times his thoughts on the impact of neobanking on the wider crypto sector.
Growth on both sides
For Denisenko, neobanking and digital assets are beneficial to each other. "I'd say Web3 technology helps inspire neobanks and fintechs to think even further outside the box of traditional banking. Neobanks can incorporate digital assets into their offering, giving users more payment and investment choices. Blockchain technology allows for enhanced security of transactions, which helps improve trust in neobanks," he said.
Custom software development firm Evercode Lab wrote in a 2022 report that there are "many similarities" between neobanking and crypto, including catering to the unbanked population. Such similarities may be why neobanking and crypto can easily work toward growth.
Why is mass crypto adoption hard to attain?
Even with the number of people using cryptocurrencies growing by the year, mass adoption is still a long way off. Denisenko said a significant barrier that keeps the broader population from adopting crypto and innovative financial solutions is "trust."
He noted that trust is a "big" issue for many people. On the other hand, it is also "heavily tied with user education," thus the need to educate more consumers about fintech innovations and crypto.
"Cryptocurrencies can be complex and intimidating for the average person, so user-friendly platforms and better education are essential for gaining mass adoption," he said.
He further added that security is one challenge that neobanks and crypto firms should overcome. "The stories around exchange hacks and crypto scams build distrust and apprehension when it comes to crypto, limiting mass acceptance and adoption," he pointed out.
Finally, regulatory uncertainty remains a major hurdle for broader crypto adoption. "Inconsistent regulations can make it hard for businesses and individuals to feel confident using them [cryptocurrencies]," Denisenko said.
The future of neobanking and crypto
Despite the challenges ahead for neobanks and crypto to grow and achieve mass adoption, Denisenko believes the future is bright.
"As blockchain technology continues to mature, we can expect increased integration between traditional banking systems and crypto services. As we are already seeing, this convergence will lead to the rise of hybrid financial institutions that offer both fiat and crypto services, making it easier for users to manage diverse assets within a single platform," he said.
Brighty is paving the way for this convergence to come to play. The app offers virtual cards for paying from any fiat account and paying from crypto accounts using digital assets as collateral.
The answer to slow, outdated systems. Meet Brighty, the fiat and crypto payment platform reshaping the future of finance. #BrightyApp pic.twitter.com/cohk7rjpQR
— brightyapp (@brightyapp) July 8, 2024
With innovations from decentralized finance (DeFi) platforms and protocols, Denisenko expects broader acceptance of crypto banking services. He also said AI will play a role in the financial revolution, given how AI bots can help provider improved customer experience and more advanced AI can provide personalized advice on investment portfolios.
Neobanking and crypto are both emerging financial subsectors that have yet to hit the same level of adoption as that of fiat currencies. However, a shifting tone among regulators and continuing innovations around the sectors can help encourage more consumers to explore the convenience and other benefits that come with crypto banking.
