Bits: Passing the Fintech baton to DeFi

Monica Desai
3 min readJun 28, 2021


Where and why should DeFi fit into a fintech roadmap?

Jamaica’s Nickel Ashmeade passes the baton to Usain Bolt in the men’s 4 x 100-meter relay final during the 2016 Summer Olympics in Rio de Janeiro, Brazil. (AP Photo/Matt Dunham)

Fintech has always been a hard but rewarding area to invest in. Hard in nature — building technology with such strong ties into regulations, compliance, age-old banking infrastructure, high trust transactions — those are complex considerations for any young startup to balance with existing product market fit and scaling challenges. Rewarding in ambition— to make financial services more accessible with less friction (e.g. fees), superior customer service, friendly UX, etc. That is a noble and necessary cause in a country where 1 in 5 is un(der)banked, and ~60% live paycheck to paycheck. Note: those stats are solely US-centric, whereas many people’s financial lives are x-border and still heavily underserved.

DeFi offers promise for fintech’s original ambition. While I’ve written about the specifics of how DeFi could apply to neobanks and payments companies here and here, I thought I’d take a step back and focus on the core reasons any fintech developer should consider building with DeFi in the future:

1. Programmability

DeFi’s programmable smart contracts allows apps to remove many intermediaries (market makers with AMMs, auditors) and automate other functions (insurance, trading orders). That reduces fees and latency.

Equally exciting, on-chain data has become a new signal that can finally supplement and ultimately supplant today’s underwriting data (FICO). While that still looks fairly basic today — think BlockFi’s over-collateralized loans, it hints at a future that could be based on on-chain reputation or other alternative data sources.

2. Accessibility

For the first time ever, people & projects around the world can borrow and lend in the same currency at the same rate. That is incredibly powerful. Increased liquidity and access should win over time, amounting to more competitive rates on more capital than the centralized alternative.

This is just the tip of the spear — a universal lending rate implies a universal minimum savings rate, and DeFi also supports access to higher risk/reward investments and x-border payments.

3. Composability

Financial service integrations are often bespoke and riddled with compliance and legal hurdles. Those barriers to entry are also barriers to experimentation. While infra like Plaid, Unit, Weav and Moov are trying to make it easier to plug and play financial building blocks, founders can attest to how far we are from a couple week or couple month fintech experiment.

DeFi’s DNA has always been open source, with forks and innovation proliferating in an almost overwhelming way. While there are fewer guarantees in DeFi, there will be winners that emerge with enough stability to work with. We’re already seeing signs of that — Uniswap & Sushiswap did $108b in DEX volume in May alone, and Compound + Aave + Maker have > $21b in outstanding loans. These are the early lego blocks but there will be more and they will keep scaling. The most cunning fintech founders will find ways to experiment with DeFi building blocks and remix them as the space continues to evolve.

Hopefully these building blocks will spark a few fintech founders / builders to consider DeFi solutions. I’ll be writing more about how to monitor the space, what to look for and B2B extensions in the coming weeks.

It’s time to pass the fintech baton!



Monica Desai

All things fintech, consumer, crypto. Currently @kleinerperkins ex @blockchain, @harvardhbs @jpmorgan @quartethealth @segoviatech @cornell @stuyvesanthigh.