FINTECH companies may move away from traditional lending services as decentralized alternatives offer more accessible loans at a lower fee.
Decentralized Financial (DEFI) lending protocol allows users to lend and borrow cryptocurrencies for passive income in an unauthorized way through smart contracts on behalf of many financial intermediaries.
According to Merline Egalite, co-founder of Morpho, the second largest decentralized lending protocol, the increased efficiency and accessibility of the Deplending protocol could encourage more fintech companies to choose alternatives to centralized lending.
He told Cointelegraph in an exclusive interview at ETHCC 2025.
“Fintech has realized that integrating defi is a strategic move. If they don’t do that, Fintech will fall behind others as they compete in the products they offer their users.”
“Fintechs recognizes that Defi can offer higher rates,” explained Egalite, adding that adoption of Defi will help financial institutions “providing the best financial products” in terms of lending and trading.
This will encourage a large portion of global fintech companies to move to Defi within the next three years, he added.
Related: ChainLink reveals compliance standards and targets 100t institutional crypto flow
According to Defillama data, Morpho is worth more than $5.5 billion in total (TVL) over 20 blockchains than lock (TVL).
Defi Loans can present a critical financial lifeline to global citizens without access to traditional banking infrastructure.
Related: Trump administration Mars’ “debanking” executive order: WSJ
The unauthorized nature of Defi helps bypass traditional banking restrictions
More and more fintech companies are recognising the benefits of the permitted nature of Defi, eliminating the financial intermediation and concentration risks associated with the lending and borrowing process.
Egalite said there is a risk of losing licenses or application programming interface (API) access using traditional bank rails.
“So you’re obsessed with big banks? At defi, you don’t have an intermediary so you’re not afraid of that. You just trust the code itself.”
Fintech companies already recognize these benefits, but products that support regulated yields could stimulate more financial institutions to explore future lending, Egalite added.
On Friday, it was loaned to a new cumulative record high of $66.7 billion on TVL on Friday, according to data from Defillama.
Aave Protocol’s $31.7 billion TVL currently accounts for 47% of the total loan amount, while Morpho’s $5.5 billion is over 8.2%.
This marked a significant recovery in crypto loans. This saw a decline in 2022 when centralized finance (CEFI) lenders Genesis, Celsius Network, Brockfie and Voyager filed for bankruptcy within two years, and the crypto valuation fell.
https://www.youtube.com/watch?v=ndnryf5nlkw
Magazine: Crypto-sec: $11 million Bitenser Phish, UWU Lend, Curve Fake News, $22 million Lykke Hack
