When we think about the world of decentralized finance (DeFi), we usually think of cutting-edge fintech startups working on open blockchain projects. Conversely, when we think of traditional finance, we usually think of large financial institutions that work with closed and proprietary technologies and data. But the line between those two worlds is starting to blur today, with large organizations starting to innovate using new finance technologies as well.
That’s why it might be surprising to learn that Experian, one the world’s largest credit reporting agencies, is innovating in the DeFi space. Vijay Mehta, Chief Innovation Officer at Experian and this week’s guest on the Fintech Growth Talk podcast, says that Experian is perfectly positioned to innovate in this emerging field.
Mehta sees DeFi as an opportunity to connect tens of millions of people who don’t have ready access to more traditional banking and lending vehicles. With greater financial equity and inclusion, individuals running micro-businesses in less affluent nations will be able to use DeFi to conduct business with larger businesses on the other side of the world.
But in order for this to happen at scale, the system in general needs greater identity and fraud protection technologies, as well as safe and secure transactions. That’s the role that Experian sees itself playing, says Mehta.
Another fundamental obstacle to more widespread adoption of DeFi products and services is usability. Too often, DeFi products aren’t always as easy to use as other more popular fintech products. “We need an alternative that’s just simpler for the consumer to interact with,” says Mehta. That said, blockchain and DeFi products are still early-stage technology (despite them being around for about 10 years).
Lastly, and tying these issues together, is consumer sentiment around DeFi products. Mehta points out that there is a lot of conflicting and misinformation that has prevented consumers from fully embracing DeFi. Along with that is consumer protection. Identity verification, for example, is a key sticking point. Although many blockchain and DeFi products tout anonymity, that’s not entirely something consumers are fully comfortable with, given that the industry is “rife with fraudsters,” according to Mehta.
That said, Mehta believes that these issues will eventually resolve themselves given enough time. He points out that it took many years for traditional finance to develop multilayer security protocols that can address consumer concerns about safety. Mehta sees Experian’s role in this as a platform for safeguarding user privacy while enabling them to safely interact with DeFi products.
Future multilayered security protocols, such as decentralized identity and identity verification, will need to be instantaneous in order for them to be effective. Mehta believes that once the technology to better protect consumers is in place, a whole new world of banking, lending, and risk management will open up. And ultimately, that will provide a means for more widespread adoption of DeFi products.
Listen to our full interview with Vijay Mehta here.