Community-Powered Banking is the Future

Community-Powered Banking is the Future • CryptoMode

Community-powered banks are in a weird place at the moment. While many recognize the importance of integrating digital services, doing so in a way that does not compromise personal touch, its foremost feature, may be a major sticking point. 

Larger banks, on one hand, pose a huge existential threat to these local banks who according to a 2020 Forbes report, gained only 20% of deposits from 2017 to 2019 despite accounting for more than 50% of bank branches in the country. With fintech value exceeding the $100 billion mark, the question right now is; what is the future of community-powered banks in 2021? 

The advent of the Coronavirus and accompanying stay-at-home orders opened up opportunities for the banking industry — increased online activities and less foot traffic in branch locations. 

During the pandemic, business owners reportedly emphasized the need for a personal relationship with banks. Through various programs, it was the community banks that were vested in the affairs of businesses and individuals they had a personal relationship with. With that being said, traditional financial institutions that do not embrace technology and these latest digital trends will soon be replaced by next-generation banks. 

The future of community-powered banks is quite clear. Unlike their larger counterparts, these banks offer community members specialized services like lending with little or no interest, personalized services for businesses and individuals, etc. 

Access to Capital 

The pandemic as highlighted earlier opened up a ton of opportunities for community banks. Catering to the needs of clients, these banks through various programs were able to support local businesses, offering them access to capital. 

While community-powered banks are in decline, the integration of technology and piggybacking on steeping digital trends may well be the push needed for the immense growth of these important yet mostly overlooked banks. 

Personalized Banking 

According to a 2016 Digital Banking report published, consumers want personalized banking services delivered in real-time. Consumers, surprisingly, are willing to partner with financial institutions to ensure that these services are delivered and on time, thus, pointing to the need for community-powered banks. 

Community-powered banking with the launch of various innovative and technology-driven projects is positioning itself for global takeover. A prime example of this is EQIFI. 

Leveraging the immense power of blockchain technology and the decentralized finance (DeFi) market, this project tagged a “community-powered bank” is positioning itself as a world leader. Piggybacking on the existing systems of a community-powered bank, EQIFI has incorporated a few others that will set it aside from the traditional banks. 

Presently the first DeFi project to be licensed by a traditional bank, this project according to its team of developers will run a community-based governance system. Ordinarily, community banks are most of the time owned by members of the community and in some cases, members will have to vote for new upgrades or strategies. This, according to the team, is what EQIFI seeks to imitate. 

Community banks, on rare occasions based on trust, may issue loans without collateral to respected members of the community. This project seeks to incorporate this system as part of its core features, albeit only available to a select few. 

Conclusion 

The future of community-powered banks at the moment is clear. If for anything, the recent happenings in the world have brought to light the importance of these banks in the day-to-day operations of local businesses. 

By integrating advanced technologies and leveraging digital banking trends, community-powered banks will be on the right path to mass adoption as it offers unique features — personalized banking, the low-interest rate on loans, community governance, etc. 

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