Fear and loathing in financial services

The recent Sibos conference on global payments was dominated by cryptic debate. Celent principle Alenka Grealish was an attendee and took away three key themes:

1. Increasingly financial institutions recognise banking and payment systems have not kept up with the pace of advancements in the digital economy and trading. Notably ecommerce is always on, fast and automated while banks rely on batch processing and messaging, clearing, settlement can take days. In response, a growing number of FIs and FI-back consortiums are harnessing blockchain, smart contracts, and digital assets to align the performance of banking/payments systems with those of the digital economy.
2. The Internet of Value is beginning to crystallise. The introduction of CBDCs will accelerate the mainstreaming of digital assets.
3. Cryptocurrencies are gaining legitimacy as a new asset class. When Bitcoin failed to gain traction as a medium of exchange for legal activities, the pivot was blockchain will be the great disrupter. Now Bitcoin is leading as a new asset class, initially driven by retail investors, followed by institutional investors. Institutional investors translate into more sophisticated demand which in turn, accelerates DeFi growth.