My recent working paper, conducted in collaboration with Singapore Management University, reveals that over 40% of surveyed experts expect high or very high adoption of Decentralized Finance (DeFi) by 2034, marking a notable shift from today’s environment where there is no adoption beyond limited experimentation.
To understand DeFi’s future impact, I surveyed 109 experts, including traditional finance professionals, DeFi industry practitioners, and DeFi-focused academic researchers.
The findings suggest that the most likely scenario is a collaborative future where financial institutions embrace DeFi rather than completely disrupting traditional finance. According to the findings, 66% of experts believe traditional finance will integrate DeFi.
Risk management, data analysis, and operations require the most adaptation due to DeFi, with circa 80% of respondents anticipating significant changes in these business areas and processes.
DeFI Challenges
However, in the study I also identify several challenges on the path to DeFi adoption. Security stands out as the primary concern, with 91% of experts identifying it as a critical issue. Data management & privacy, and regulatory compliance are also significant issues that must be addressed closely.
Experts also highlight a growing need for new competencies in the financial services industry. By 2034, strategic competencies related to DeFi are expected to become crucial, with circa 84% of experts rating them as important or very important, up from circa 60% today.
One interesting finding from the survey shows that experts with more than 20 years of experience displayed greater optimism about DeFi’s potential impact than their less experienced counterparts. This suggests that seasoned professionals who have witnessed previous technological changes in finance see strong potential in DeFi to act as an agent of change.
Expert opinions indicate an evolving financial landscape in which DeFi becomes an integral part of the industry rather than replacing traditional processes and technology. In addition to strategic competencies, financial institutions should invest in developing DeFi sector-specific and technological competencies to remain competitive.
Based on these findings, it appears sensible for financial institutions to start preparing for a future where DeFi capabilities become essential for remaining competitive in the financial services industry. Those who adapt early and thoughtfully may find themselves better positioned to thrive in the evolving financial ecosystem of 2034.
For professionals seeking to develop DeFi literacy, I teach an executive course, “Decentralized Finance (DeFi): A New Financial Ecosystem,” at SMU Academy, which provides a comprehensive introduction to the emerging field.
Featured image credit: freepik
