In a recent interaction with Cryptonews, Nikolay Denisenko, the co-founder and CTO of Brighty app, pointed out some of the critical hurdles that crypto companies often stumble upon when navigating the transition to neobanking.
Denisenko, known for previously spearheading backend engineering at neobank Revolut, emphasized the importance of a collaborative approach among industry stakeholders and regulators. This common thrust would be geared towards overcoming obstacles related to regulation, gaining trust, and ironing out the tech limitations that pose as a quartet of significant challenges when migrating from traditional banking to neobanking.
Crypto companies, according to Denisenko, are regularly caught up in the crosshairs of regulatory roadblocks. The heavily monitored banking industry has a comparatively less intrusive regulatory sight on the digital space. However, digital finance requires a strong regulatory framework to find its footing within the global financial system.
Yet, financial regulations are just one side of the coin. Widespread lack of understanding and trust, combined with the stiff competition from established financial institutions, make it increasingly challenging for these digital entities to accumulate trust among potential customers.
Interestingly, Denisenko remains positively anticipant for the future of crypto adoption and fintech growth in Europe. He attributes this optimism to the EU and its clear and harmonized framework in the form of the Markets in Crypto-Assets (MiCA) regulation.
Shifting focus to Web3 tech, Denisenko reckons that this technology, with its roots deeply embedded in decentralization, can be leveraged by neobanks and fintechs to design financial services that are secure, efficient, transparent, and user-empowering.
Remarkably, the current state of EU neobanking serves as a testament to Denisenko’s statements. This sector has seen an influx of neobanks and digital banking solutions from established institutions alike. Many EU-based neobanks have also spread their wings into North America, Asia, and other regions; a definite sign of the global potential of these novel services.
But there are certain gaps in the armor that EU neobanks need to mend for long-term success. These include better integration of fiat and crypto services to one-stop-solution, offering advanced DeFi products, implementing proof-of-reserves, and simplifying user experience.
Wrapping up the discussion, Denisenko foresees the rise of “DeFi banks” in the future, with crypto banking inching closer to becoming mainstream. Despite the considerable challenges to overcome, his vision presents an intriguing future where neobanks and crypto-centric fintechs gain significant market share and traditional banking entities are pushed to pull their socks up.
Source: Cryptonews
