Decentralised lending started in 2018. Today DeFi lending and borrowing holds about $18 billion in assets. The adoption of digital money is getting into banks while crypto is expanding and reshaping how people borrow and save. The rise of Bitcoin and other cryptocurrencies redefined the meaning of money. Consequently, cryptocurrencies have resulted in a new universe with an alternative way of providing financial services. With crypto lending and borrowing, investors earn interest on the crypto that they’re holding. Often, the interest earned is much higher than that would have been earned in a traditional bank. Consequently, you can use crypto as collateral to access loans. Also, crypto loan issuance doesn’t require a credit score. DeFi is defined as a parallel finance ecosystem within which consumers can make transfers, lend, borrow, and trade. This ecosystem is meant to be completely independent of traditional financial institutions. DeFi seeks to eliminate the need for intermediaries and trust. Instead of dealing with a financial service company, the customer uses automated crypto-enabled financial services. Unlike in traditional banks, with crypto, you can earn very high returns on investment overnight. Artificial Intelligence and Machine learning The financial services industry has cautiously incorporated AI and ML into the different areas of financial processes, services, and products. Currently, ML is widely used by financial institutions because it digests data and automatically applies the learned knowledge to specific tasks. According to a survey done by Deloitte, 70% of financial services providers use ML for fraud detection and prediction of cash flow occurrences. Today, AI is combined with blockchain to leverage the different properties that they contribute. AI offers its predictive power while blockchain offers decentralised security. One area that AI and blockchain could improve is lending services. AI would enable banks to simplify loan acceptance parameters and make the credit system more flexible while blockchain would enable banks to have immutable records of customer transactional activities and history. This would allow access to authorized parties making the loaning process easier. Bottom Line: Financial Inclusion The introduction of blockchain technology, cryptocurrencies, artificial intelligence, and machine learning, enabled by the Internet of Things (IoT), has changed how financial services are offered. The solutions lower cost and increase efficiency, thereby, promoting financial inclusion. DeFi is better suited to serve people who avoid banks or those that can’t access financial services through the traditional finance ecosystem due to high fees. The topic of new innovative technologies disrupting and improving the financial industry is very wide. There’s still more room for research and discussions. Despite that, the financial industry is experiencing major changes in how services are provided.

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