Fintech companies are expected to transition to decentralized finance (DeFi) lending within the next three years, driven by the advantages of DeFi's permissionless model, which facilitates accessible loans at lower fees compared to traditional lending services. Merline Egalite, co-founder of Morpho, a notable decentralized lending protocol, emphasized that the integration of DeFi is becoming a strategic necessity for fintech firms to remain competitive in user experience and product offerings. With DeFi providing higher rates, financial institutions can enhance their lending and trading capabilities. Morpho stands as the second-largest decentralized lending protocol with over $5.5 billion in total value locked (TVL). The rise of DeFi lending protocols, now reaching a cumulative all-time high of $66.7 billion in TVL, indicates a growing departure from centralized finance models, particularly in light of earlier failures of centralized lenders. This shift promises to empower borrowers who are underserved by traditional banking systems.

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