More banks are adopting blockchain and NFTs: Expert – News

Financial mishaps like the FTX collapse and SVb’s failure has prompted a shift towards blockchain

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More banks globally are adopting blockchain and non-fungible tokens (NFTs), according to an expert.

Leila Hurstel, the CEO of technology company Verse Estate, was speaking at the Banking, Innovation and Technology (BIT) event organised by Khaleej Times on Wednesday. “Major institutions like Goldman Sachs are now trading in bitcoin futures, signalling crypto’s mainstream adoption,” she said. “It is no longer a question of whether banks will adopt these new innovations. It is just a question of when because without it, they won’t be able to survive.”

The two-day BIT event brought together industry experts to address the most pressing needs of the banking industry while also exploring the latest technology available to cater to customer needs.

Leila said that financial mishaps like the FTX collapse and SVb’s failure has prompted a shift towards blockchain for stronger, transparent financial structures. “It is not just the rise of fintechs but also DeFi, which is decentralised finance,” she said. “Also new technology like Web3, Neobanks and CBDCs. These are all new ways of utilising technologies to deliver more seamless financial services to a wider population at a much faster and cheaper rates.”

Neobanks are fully digital banks that don’t have a physical presence while CBDCs are central bank digital currencies which are the digital equivalent of a government backed currency. The first phase of UAE’s CBDC — the Digital Dirham — was announced earlier this year and is expected to be completed in 2024.

Leila said that this adoption of new technology has shifted the culture to to a more customer centric digital first one. “Now this is what customers are expecting,” she said. “And we can see right now that it’s working because you see the popularity that fintechs, DeFi and Web3 neobanks are gaining. This has been putting a lot of pressure on traditional banks to innovate and to think outside of the box as fast as possible, because if they don’t, they’re just not going to remain relevant anymore.”

Leila also explained how neobanks work with the example of a global bank. “Hi is a Web3 neobank and what they do is they integrate all emerging technologies like blockchain, cryptocurrencies and NFTs into one fully comprehensive financial ecosystem,” she said. “It’s just one integrated platform and all customers need to do to access the bank is download a mobile app. They can earn up to 30 per cent annually just on crypto. They can they get their own Iban, and all financial transactions are made with NFTs. So, the transactions are instantaneous, and everything is much more robust and secure.”

According to her, banks are increasingly turning to NFTs for secure digital identity verification and to reduce fraud risks. “NFTs are being trialled for representing ownership of assets like real estate and stocks,” she said. “Some banks like HSBC are tokenising legal documents and shareholder records as NFTs.”

However, she added that a complete reliance on blockchain was not a solution. “It is true that blockchain enhances security and efficiency,” she said. “But it is not a catch-all solution and must complement other financial reforms.”