Do yourself a favor and Google ‘banking reimagined” - or better yet - don’t. The phrase has been used to death by anyone talking about banking from Capital One and Royal Bank of Canada to Deloitte and Bloomberg.

However, with this incessant marketing of “reimagination,” it feels like nothing has changed. We still see the same fees, the same products, the same archaic architecture and the same extractive business models. It’s nothing new.

For example, check this Capital One ad from 2017 and then the second one from 2024. 7 years later and they are promoting the exact same products (no fees, no minimums), but saying that it is reimagined. I don’t get it.

2017:

2024:

This is obviously one narrow example, but the entire banking industry is a far reach from any kind of major innovation.

But, there is a bright spot.

With the continual adoption and proliferation of crypto, it feels like we are on the precipice of something much larger. The explosion of onchain activity has quite literally changed the way we think about finance, and is now starting to change the way we think about banking.

First of all, banking and banks are not the same. Banking is generally categorized by things like accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards. Banks are the institutions that offer those services.

By decoupling banking services from the banks, it’s clear that the banks themselves are generally unnecessary. In fact, when looking at stories about banks like Silicon Valley Bank and Lehman Brothers, big banks have proven to take on unnecessary risk (like poor management of deposits and predatory loans) and are vulnerable to catastrophic failures.

It’s clear that banks could be replaced with a similar structure that offers the same - or better - services.

Crypto provides the opportunity to actually rework how banking operates: amplifying the parts that work and we want to keep, cutting out unnecessary risk and inefficiencies, and then implement the services onchain.

We already know the advantages that come with blockchain: it’s decentralized, digital assets are fully and solely owned by individuals, and the crypto sphere is highly composable. Also, there are less regulatory roadblocks in comparison to the highly regulated banking system. (There is a long list of pros and cons for the crypto industry with this, but that’s for another day.)

But one thing is for certain: blockchain offers the benefits of - and is ultimately superior to - traditional banking.

So, what would banking look like if we were to actually reimagine it onchain?

In his book Read, Write, Own, Chris Dixon uses first principle thinking to lay out what he deems at the three main functions of any bank:

1. Store value

2. Money movement

3. Offer credit

The simplicity of this thought process makes it very easy to draw a mental model of how banking - and again, not necessarily banks - is useful to society.

Storing and moving money are pretty straight forward concepts, and credit (when used correctly) is an excellent instrument to grow your wealth.

Reducing it down one level, there are fundamental principles that are at the core of those offerings.

1. Storing value should mean that you own your money. It is yours - you can stash it wherever you want and you can access it whenever you need.

2. Moving money means you have the freedom to do whatever you want with that money (as long as it’s legal).

3. And credit means that you can literally create value and ideally grow your wealth.

These core principles actually translate quite seamlessly to the existing onchain ecosystem.

Self-custody has become the cornerstone of most onchain apps, as we have all seen the weaknesses of fully custodial products. Whether it be a hot wallet, a smart account or an MPC wallet, there are plenty of cutting edge solutions that allow users (and businesses) to truly own their onchain assets.

Blockchain’s open infrastructure inherently offers unprecedented freedom to move money. It enables users to move assets across geographies, swap them into different tokens, send them to any address, bridge them to a different blockchain, or use them to interact with any application - all this, at any time of the day, instantly, and without any centralized entity interfering. Blockchain is the most open financial infrastructure ever to exist.

One of the most fruitful and active creations that has come from the emergence of blockchain technology is the massive adoption of decentralized finance (DeFi). DeFi protocols offer products that range from borrowing, lending, yield accrual, perpetuals, etc. As of this writing there is currently about $80 billion locked up in DeFi protocols (for scale is similar to the GDP of a country like Luxembourg).

These products are continually expanding and offering the opportunity to accessibility to financial instruments that can help grow individual wealth like never before. A great example of this is the access to the tokenization of real world assets (RWAs). Individuals are able to get APYs higher than 10% on assets that they have full custody of and that are fully liquid. This is a mind-blowing phenomenon that was not fathomable to consumers a few years ago.

To summarize:

1. Self-custody enables anyone to truly own their assets

2. Blockchain’s open infrastructure allows anyone with assets to instantly move them anywhere in the world at any time.

3. Decentralized finance (DeFi) protocols offer an abundant amount of financial products to grow wealth

It's quite clear that the onchain economy will only continue to grow and blockchain will eventually become the underlying tech that powers online finance. Some would even posture that blockchain is in fact the internet, reimagined. And if that's the case, it only makes sense that banking functionality is created to interact with it. Banking functionality that is natively built onchain and offers all of the same ‘good stuff’ that traditional banking offers, but with the added superpowers of the blockchain.

We are past the point of having “no fees” for a bank account. We are past the point of extractive and predatory banking. We are past the point of the same old narratives.

Banking is getting reimagined. Corporations are cutting out card networks. Fintechs are cutting out middlemen and banks. And crypto is doing all of that on a global, decentralized, instant-settlement layer.

This doesn’t mean that the traditional banking system will cease to exist or be completely replaced. But it does need a major facelift.