Technology is pushing the world of financial services into a new paradigm and, according to some top bankers, it is becoming harder and harder to distinguish different sectors.
The financial world is changing right in front of our noses and many are struggling to keep up.
In a recent podcast, Goldman Sachs’ co-head of global securities, R. Martin Chavez, said that dichotomies of the past are falling apart. Clear distinctions between buyers and sellers, infrastructure providers and banks, and data users and providers are all collapsing onto each other. What is emerging is a completely new paradigm led by software.
“All of those dichotomies are going away and so it’s going to be much much harder to know, is this a client? Is this a competitor? Is this a counterparty? And we all really need to start thinking more about the ways in which we’re overlapping with other participants in the financial ecosystem as opposed to, is it a competitor? Are you with us or against us?”
This narrative is rendered further complicated by security tokens which bring an entirely new dimension to trading. With the cryptocurrency markets moving on a 24-7 basis, software is becoming crucial to managing these assets. Moreover, the tokenization of traditional assets will inevitably bring more liquidity and, likely, more need for risk assessment.
There’s little doubt that fintech will continue to grow in importance. Yet, the issue is that we currently do not possess the means to ‘catch up’ with this transformation. Infrastructure is becoming more interconnected, and without a safe, transparent mechanism of monitoring assets, it could all pose serious problems down the line. This, arguably, is the promise of security tokens: to provide a safe, immutable, and transparent means of monitoring traditional assets and newly-issued ones on-chain.
In short, we possess the technology now to create a comprehensive infrastructure for this growing complexity in the financial world. The question is: will our institutions come together to adopt such a system or will it have to be imposed on them by competing decentralized models?
Do you believe security tokens can help bridge together these blurring distinctions in the financial world? Let us know your thoughts below in the comments.
Image courtesy of The Alumni Society.