Participants from different backgrounds are actively entering the on chain financial ecosystem, ranging from traditional financial institutions such as JPMorgan Chase to native crypto companies such as Circle. This phenomenon reminds people of the competitive landscape of the fintech industry in the past. At that time, technology companies entered the financial sector by internalizing core functions such as payments and remittances, while traditional financial institutions expanded user touchpoints and improved operational efficiency through digital transformation.
The key is that this competition is not simply parallel, but breaks the boundary between the two. Similar phenomena are now reproducing in the field of on chain finance. For example, Circle applies to establish a trust bank to directly handle core functions such as reserve management and asset custody. JPMorgan Chase, on the other hand, issues deposit tokens on the public blockchain, expanding into the field of on chain asset management. The two started from different directions, but gradually absorbed each other’s strategies and business areas, trying to find a new balance point.
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This trend brings new opportunities, but also comes with risks. If traditional financial institutions are eager to imitate the agility and speed of technology companies, they may conflict with existing risk control systems. For example, Deutsche Bank promoted a “digital first” strategy and made large-scale IT investments, but system errors caused by conflicts with old infrastructure resulted in billions of dollars in losses.
On the contrary, native encryption companies face different risks. They may sacrifice flexibility and execution capabilities due to excessive pursuit of institutional acceptance – these have always been their main competitive advantages.
The success of on chain financial competition ultimately depends on a profound understanding of one’s own foundation and unique advantages. Enterprises must develop strategies based on their ‘asymmetric advantages’ and coordinate the integration of technology and institutional frameworks on this basis. Whether these two factors can be balanced will determine who can become the ultimate winner.