As traditional credit markets converge with decentralised finance, a new landscape is emerging, one that is filled with both possibilities and challenges.
At a recent panel moderated by Raphaël Bloch, Cofounder & Editor in Chief at The Big Whale, industry leaders Emma Lovett (JPMorgan Chase), Michael Bentley (Euler Labs), and Bilal El Alamy (Zaïffer) explored this theme, specifically how trust, transparency, and technology are reshaping the future of credit.
Event Panel: The Future of Credit: Banks, DeFi, and Hybrid Models
Trust as the cornerstone of credit
Each member of the panel emphasised that trust remains the bedrock of credit markets. Whether it’s issuers seeking low borrowing costs or investors demanding high returns, strong client relationships continue to be essential for bridging the gap. Banks play a critical role in validating creditworthiness and stabilising markets, especially when mispricing in secondary markets threatens to distort borrowing costs.
Because, while technology may be transforming credit, trust doesn’t come with an API.
Private vs. public blockchain networks
The panel further explored the tension between private and public blockchain infrastructures. Private networks, we heard, offer control and security, but face hurdles in onboarding participants and maintaining liquidity. Public blockchains, while still maturing, promise broader access and innovation. The consensus was that both models have merit, and so the future likely lies in a hybrid approach that blends the strengths of each.
DeFi’s role in credit innovation
Next to be highlighted was the potential of DeFi to democratise access to credit and how on-chain transparency allows sophisticated actors to assess risk and credit connections effectively. However, the panel cautioned against over-reliance on DeFi alone. A balanced ecosystem, one that includes centralised institutions, decentralised protocols, and hybrid models, is key to sustainable innovation.
Programmable privacy and selective transparency
The concept of programmable privacy, a technology that enables selective sharing of financial data, was lauded. By embedding privacy natively into Ethereum, the aim is to preserve liquidity while allowing institutions to control what information is shared and with whom. It was exciting to hear how this approach could revolutionise compliance, enabling real-market selectivity without compromising transparency.
A unified ledger for regulatory simplicity
One of the most forward-looking ideas discussed by the panel was the potential for a single, unified ledger to simplify trade records and regulatory reporting. Such a system could reduce operational overhead, offer regulators real-time access to market data, and preserve competitive advantages for large investment managers. It’s a triumphant vision of efficiency and transparency that could redefine how financial markets operate.
The discussions may have been ranging but the central point remained clear. As credit markets evolve alongside decentralised finance, the path forward lies in collaboration, innovation, and trust. It was clear the panel believed that, while banks should remain central to validating credit and maintaining stability, DeFi could introduce powerful tools for transparency and access. A hybrid model, combining the strengths of private and public blockchains, programmable privacy, and unified ledgers, offers a compelling vision for a more efficient, inclusive, and transparent financial future.