Mukaya “Tai” Panich, Chief Venture and Investment Officer of Siam Commercial Bank’s venture arm SCB 10X, envisions a world where decentralized finance (DeFi) powers the back-end of traditional finance firms.
Panich spoke with us about why Thailand’s oldest bank is bullish on DeFi and how its digital technology investment arm, which selects DeFi projects “with a global mindset that is focused on how to gain mass adoption,” sees the DeFi/traditional finance integration coming to fruition.
Here’s what he had to say:
DeFi is a good investment.
We want to invest in DeFi and be a part of the ecosystem because we want to understand and capitalize on DeFi, which has the potential to significantly impact the financial industry.
That is why, this week, we held our second annual ReDeFiNE Tomorrow virtual conference, which brought together industry leaders such as Stani from Aave, Jeremy from USDC, Rob from Compound, Michael from Fireblocks, and many others to discuss the latest innovations and developments in the industry.
I envision a world in which DeFi powers the backend of traditional financial institutions. Traditional financial institutions could potentially engage in customer-facing activities such as customer acquisition by providing them with a simple, easy-to-understand, and integrated interface.
DeFi can power the backend, reducing transaction times, costs, increasing transparency, and shortening settlement times, among other things. In order for this to happen, I believe traditional financial institutions such as ours should actively investigate, invest in, and adopt DeFi. Simultaneously, DeFi firms should seek collaboration with traditional financial institutions in order to capitalize on their respective strengths.
What are the plans for SCB 10X?
There are two major areas in which our investments in DeFi will be concentrated.
First, invest in projects that parallel traditional finance so that we can learn how to do it decentralized while also teaching the startup best practices from the traditional finance world.
This is true of the two DeFi projects in which we have invested, Alpha Finance Lab and Anchor Protocol. Alpha Finance is a leveraged credit/lending protocol. The anchor protocol is causing havoc in the fixed income market, which has a market capitalization of $128 trillion and is the largest asset class in traditional finance.
Second, invest in DeFi infrastructure. I’ve always been an active infrastructure investor because investing in picks and shovels is always a good idea. I believe that the DeFi app/Dapp has been innovating at a rapid pace in the last year and that the infrastructure for DeFi now needs to be upgraded to keep up with all of these innovations.
I am currently most interested in cross-chain communication and interoperability across different blockchains, blockchain network infrastructure – operational intelligence monitoring, and runtime security monitoring of DeFi protocols to prevent attacks and exploits.