What is the potential of NFT-based banking
With global banking landscape expected to adopt a decentralised approach, investors seem to wonder how non-fungible tokens (NFTs) can contribute. It is believed that NFT marketplaces can permit NFTs’ utilisation to boost the rate of 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 range in 2022. Reportedly, NFT sales overtook $250 million on the Nifty Gateway platform along with creation of an around $41 billion worth expenditure in cryptocurrency, for 2021. “I believe the rise of NFTs and their associated marketplaces has disrupted the traditional art and collectibles market. Banks might foresee an opportunity for new revenue streams such as offering financial services to NFT marketplaces and their users by providing custodial services to NFTs,” Vijay Pravin Maharajan, founder and CEO, bitsCrunch, a global data analytics company, told FE Blockchain.
Market research has shown that NFTs’ utilisation as collateral can help process mortgages faster and ensure funds can be transferred from anywhere. Insights from Insider Intelligence, a market research firm, mentioned that NFTs can help banks cope with problems around handling sensitive financial data. Experts suggest that financial technologies (fintechs) can also avail benefits from NFT trading, and conduct distribution of royalty payments.
“In a digital payments world, NFTs can be used to verify digital identity. Firstly, the NFT demand can drive technological innovation and investments in space. Secondly, since NFTs are considered nascent, regulations might help legitimise their usage. NFT-based banking has the potential to revolutionise the concept of ownership and lending,” Edul Patel, founder and CEO, Mudrex, a crypto investing platform, stated.
Reportedly, platforms such as The Sandbox, OpenSea, Immutable X, among others, have inculcated NFT-based banking applications. For example, OpenSea permits users to make payments using debit and credit cards and Apple Pay.
From a future perspective, NFT-based banking can head for mainstream usage through adoption of a regulatory framework. As stated by Krungsri Research, a financial group, banks should adopt practices such as brand awareness, operational efficiency, and introduction of new products to enter the mainstream NFT ecosystem, keeping in mind technological advancements. “With the addition of tokenisation of physical assets, banks aim to eye them within the context of metaverse. However, I think the marketing and promotions part of the banks is gearing up for utilisation and distribution of NFTs to potential customers on metaverse,” Pratik Gauri, founder and CEO, 5ire, a blockchain-based platform, concluded.
