Fintech Firms Predicted to Adopt DeFi Lending by 2028

Merline Egalite, co-founder of Morpho, has predicted that financial technology companies will adopt decentralized finance (DeFi) lending protocols within the next three years. This prediction was made during an exclusive interview at EthCC 2025, where Egalite discussed the strategic necessity for traditional fintech firms to integrate DeFi solutions. Morpho, the second-largest decentralized lending protocol, has over $5.5 billion in total value locked across 20 blockchains, trailing only AAVE, which commands $31 billion in total value locked.

Egalite highlighted that fintech companies are recognizing the competitive advantages of DeFi protocols, which offer higher interest rates and reduce dependency on centralized banking infrastructure. Traditional fintech firms face risks such as license revocation and API access termination from large financial institutions, which DeFi protocols eliminate through permissionless blockchain infrastructure. This shift is driven by the need for fintech companies to offer superior user experiences and financial products to stay competitive.

The migration to DeFi lending is supported by the growth in total value locked in DeFi protocols, which reached a cumulative all-time high of $66.7 billion in 2025. Major stablecoin vaults expanded from approximately $4 billion to $15 billion in supply-side deposits over the past 12 months, demonstrating institutional comfort with DeFi as legitimate financial infrastructure. The emergence of curator-managed vaults, where firms like Gauntlet manage nearly $750 million in total value locked, represents a new asset management model within DeFi.

The shift toward DeFi lending protocols will reshape the broader financial services landscape. Traditional banks and investment firms face pressure to integrate blockchain-based lending solutions or risk losing market share to more agile competitors. This transformation reflects a larger trend where financial institutions adopt DeFi infrastructure while maintaining familiar user interfaces. For instance, Coinbase has implemented this model by integrating Morpho's lending capabilities directly into its consumer interface, allowing users to borrow against Bitcoin holdings.

The regulatory environment may accelerate institutional adoption as clearer guidelines emerge, particularly under the current administration. This regulatory clarity will likely prompt more institutions to integrate decentralized lending protocols and offer competitive yields to their customer base. The "DeFi mullet" approach, which abstracts away technical complexity while providing access to superior financial products, is expected to bring DeFi to mainstream users in 2025. This strategy will allow fintech applications to offer DeFi solutions to a broader range of users, further driving the adoption of decentralized finance.