How a DAO for a bank or financial institution will look like

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DAOs can pro­vide sev­er­al ser­vices for banks, includ­ing asset man­age­ment, com­pli­ance and lending.

Banks today are already using blockchain tech­nol­o­gy for things like pay­ment, clear­ing and set­tle­ment, trade finance, iden­ti­ty and syn­di­cat­ed loans, accord­ing to The Finan­cial Times. How­ev­er, there are still many unex­plored areas in bank­ing where a DAO-based mod­el might be useful:

Fundraising

In the cryp­to world, ini­tial coin offer­ings (ICOs) are break­ing down the bar­ri­er between access to cap­i­tal and tra­di­tion­al ser­vices like cap­i­tal-rais­ing firms. Like­wise, banks can use DAOs to raise cap­i­tal from a wider pool of investors via ICOs.

Loans and Credit

Using decen­tral­ized tech­nol­o­gy in bank­ing can elim­i­nate the need for gate­keep­ers in the lend­ing indus­try. DAOs pro­vide more secure ways for peo­ple to bor­row mon­ey, not to men­tion low­er inter­est rates and bet­ter terms.

Trade Finance

DAOs could also stream­line trade finance by dig­i­tiz­ing paper-based process­es and automat­ing man­u­al tasks. This would make it eas­i­er for banks to keep track of their trans­ac­tions, there­by reduc­ing the risk of fraud and estab­lish­ing trust among glob­al trade parties.

Securities

A DAO can help banks issue, man­age and trade secu­ri­ties, both dig­i­tal and tra­di­tion­al. Through tok­eniza­tion of tra­di­tion­al secu­ri­ties such as bonds, stocks, and oth­er assets and plac­ing them on blockchains, banks can facil­i­tate the cre­ation of cap­i­tal mar­kets that are inter­op­er­a­ble, effi­cient and acces­si­ble to the greater public.

Customer KYC and Fraud Prevention

Since DAOs are trans­par­ent and decen­tral­ized, they offer a way for banks to ver­i­fy the iden­ti­ty of their cus­tomers while pre­vent­ing fraud. Using smart con­tracts, banks can auto­mate cus­tomer onboard­ing and KYC process­es. Blockchain tech­nol­o­gy also offers finan­cial insti­tu­tions an effi­cient and secure plat­form for shar­ing infor­ma­tion with oth­er firms.



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