What is the potential of NFT-based banking
With a global banking landscape expected to adopt a decentralized approach, investors seem to be wondering how non-fungible tokens (NFTs) can contribute. It is believed that NFT marketplaces can allow NFTs to be used to speed up digital payments globally.
According to METAV.RS, a metaverse management platform, NFT-based weekly sales capacity increased from 100 in 2017 to around 15,000-50,000 in 2022. NFT sales reportedly topped $250 million on the Nifty Gateway platform along with the establishment of around $41 billion worth of cryptocurrency spending, by 2021. “I believe the rise of NFTs and their associated marketplaces has disrupted the traditional art and collectibles market. Banks can foresee an opportunity for new revenue streams such as providing financial services to NFT marketplaces and their users by providing custody services to NFTs,” Vijay Pravin Maharajan, founder and CEO, bitsCrunch, a global data analytics company, told FE Blockchain.
Market research has shown that NFT’s use as collateral can help process mortgages faster and ensure that funds can be transferred from anywhere. Insights from Insider Intelligence, a market research firm, mentioned that NFTs can help banks deal with issues around handling sensitive financial data. Experts suggest that financial technology (fintechs) can also benefit from NFT trading and perform distribution of royalty payments.
“In a digital payments world, NFTs can be used to verify digital identity. First, NFT demand can drive technological innovation and investment in the space. Second, since NFTs are considered nascent, regulations can help legitimize their use their. NFT-based banking has the potential to revolutionize the concept of ownership and lending,” said Edul Patel, Founder and CEO, Mudrex, a crypto investment platform.
Reportedly, platforms such as The Sandbox, OpenSea, Immutable X, among others, have instilled NFT-based banking applications. For example, OpenSea allows users to make payments with debit and credit cards and Apple Pay.
From a future perspective, NFT-based banking services may move towards ordinary use through the adoption of a set of regulations. As stated by Krungsri Research, a financial group, banks should adopt practices such as brand awareness, operational efficiency and new product introduction to enter the mainstream NFT ecosystem, considering technological advancements. “With the addition of tokenization of physical assets, banks are aiming to see them in the context of the metaverse. However, I believe that the marketing and promotion side of the banks are preparing for the use and distribution of NFTs to potential customers on the metaverse,” concluded Pratik Gauri, Founder and CEO, 5ire, a blockchain-based platform.
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