Tokenization has become one of the most trendy aspects of crypto/blockchain technology since the past year. Everywhere, we read about how blockchain companies are fractionalizing real world assets and tokenizing them into crypto assets.
Earlier this week, industry trade group, Swiss Fintech Innovation, released a research paper titled "The Vision of Tokenized Finance” where they shared insights into the ideas, potentials, and benefits of a new infrastructure for financial services. This interest in tokenization, even by native web2 leaders, makes us wonder: What exactly is tokenized finance? How can it be easily adopted by non-web3 natives? In today's article, we shall answer both questions, and also discuss the relevance of customer support teams in achieving this large scale adoption.
Understanding Tokenized Finance
Tokenized finance is an aspect of DeFi (Decentralised Finance) that involves the representation of traditional financial assets like currencies or commodities, as digital tokens on a blockchain network. These tokens represent each unit/fragment of the real world asset, while their digital representation can be used to verify ownership, item authenticity, etc. These tokens are also programmable, and can be used in various financial settings such as lending, borrowing, trading, etc, and more in the decentralised world.
Tokenized finance relies on smart contracts and blockchain technology to operate. This is its foundation for automation in execution and finalisation of financial agreements, eliminating the need for intermediaries and control points like banks. These smart contracts are self executing programs written as sets of instructions that govern the conduct of transactions between two users. These programs also execute themselves without the need of a central authority/external body directing or interfering in its operations. These contracts serve to guide users in a “trustless” system, to ensure that no user is exploited.
The tokenized items are mostly graphical or elemental representations of the real world piece, uniquely marked with identifiers to verify authenticity. These tokens follow certain blockchain rules that guide their creation, usage and integration in web3’s DeFi space. Some of these token standards are ERC-20s, ERC 721s, ERC- 3643, etc. Backed by a real world asset, digitised tokens of a unique asset can be created through FRACTIONALIZATION. This is a system whereby a single real world asset is broken down into smaller units, whole in reality, but fractionalized on blockchain. A practical use of this technology would be in the distribution of ownership of a single item. Here, those interested in owning an item can easily own a piece of the item according to their capacity and interest. This is a revolutionary concept for commodities like solid minerals, real estate ownership, investment management, and so much more.
Customer Education on Tokenized Financial Products
Despite its plethora of potentials and promises, tokenization can only remain a concept if there is no user adoption. Its complexity in terms and technicality in processes often scare new users away, as they are unable to understand what they’re doing. Therefore, educating new users on the “must-knows” before interacting with tokenized financial products.
For instance, at the issuance of CBDCs, central banks can launch educational campaigns to educate the citizens on how they could use their crypto tokens as alternatives to fiat, and enjoy certain benefits (either in ease of transaction, or user reward programs). And for tokenized RWAs, blockchain platforms, protocol devs, and every stakeholder involved in the development of this novel technology, have a responsibility to educate the global audience of the potentials of this concept. But to do this, professional support teams must be trained to assist in communicating with the users, addressing their queries, and educating them on usage.
Customer Support for Addressing Customer Concerns and Educating Users
To enhance the usage of tokenized finance, ecosystem contributors and product companies must ensure that their support teams are well equipped and available to help simplify the adoption process for the new users. Especially as a delicate concept and service, the need for cautious usage and interaction is key for continuity, further highlighting the relevance of customer support teams in improving product usage and growth.
Customer support teams are needed to educate users on product guidelines, usage methodology, terms and conditions, and so much more. These are important information that guide the users to maximise usage, while protecting the firm from high cases of user complaints. According to online surveys, 71% of customers believe user education is very important.
In tokenization, support reps help educate users on cryptocurrency terms, tokenization processes, product usage, incentivization, and other aspects of the project and its platforms that are important for users to learn to master their proficiency in these services and platforms. Users need to also learn about governance rules, regional laws, and other non-crypto constraints that can affect their items and ownership.
During cases of user conflicts such as contest of ownership, suspected violations, and outright attacks, support teams serve as the centurions tasked with maintaining peace and tranquillity between community members. Support reps step up as mediators and community moderators to review and resolve cases of dispute amongst the community members. However, one major advantage of tokenization is how it resolves issues of ownership dispute almost immediately.
At the point of tokenization, assets are distributed and paired to wallets which are registered for attestation of ownership. If these tokens are sold, i.e ownership is transferred, the smart contract managing the tokenization replaces the original paired wallet, and replaces the new holding wallet as the authentic owner of the item. Therefore, in cases of ownership disputes of tokenized real world assets, blockchain structure resolves it, as its proof is authentic. However, support teams remain relevant for the verification and attestation of ownership should such cases arise.
From user onboarding, until product mastery, customer support teams are needed to provide usage support to users at every stage of their adoption journey. Sometimes, support may be a simple FAQ, other times, it could be an installation assistance request. Regardless, support teams must be on standby to ensure users obtain the materials, answers, and tools needed for use. For tokenization, this may include onboarding requests, educative secure materials, dApps interaction, and so much more.
Statistically, 6 in every 10 crypto enthusiasts believes support is crucial for usage. And this is also obvious in the account of users who rely on third party reviews to understand certain services/concepts launched by tokenization platforms and projects.
Building a Support Ecosystem for Tokenized Finance Platforms
Support teams must possess a high level of familiarity with the concept of asset tokenization to be able to provide reliable support services to platform users. Product awareness improves support accuracy by 75%, reducing time spent on resolving user issues. Similarly, having support teams who are well grounded in the DeFi world of asset tokenization, would improve the efficiency of the support teams, as they operate based on professionalism and personal experience.
Educational resources and guides must be consistently available for new and existing users to access. Support teams are to develop comprehensive resource materials, usage tutorials, FAQs, etc, to help users understand the language and terms of their interactions, platform features, safety practices, and more. This plays the role of self-service guides, reducing support requests by 30%. To improve the quality of resource usage, these materials must be well drafted to contain and highlight only user relevant content, to protect users from being overwhelmed due to information overload.
Given the global nature of tokenized finance, multi-lingual support teams are an essential component for high value support service. Carefully distributing support teams with multilingual members around the globe helps create a 24/7 availability of human support representatives to handle user requests and inquiries. Businesses with multilingual members are 3x more likely to succeed in the global market, compared to businesses with only one language. Therefore, businesses aiming to attract users globally, multilingual support reps are a must-have.
Knowledge Bases should be updated regularly as a community engagement activity. Support teams can help to facilitate interactive sessions within the user’s community as a social activity for learning and community development. When users are engaged thus, they are 40% more likely to continue patronage and resolve issues gently. For DeFi services like tokenization, these knowledge bases can also help prevent cases of permanent loss, data compromise, and even address hacks.
The need for security in DeFi, blockchain and web3 cannot be overemphasised. As a technology still in development, certain loopholes and vulnerabilities may try to be exploited by hackers and malicious players, but every tokenization service provider must prepare its protocol against any form of attacks perpetrated by hackers. This includes implementing stringent security protocols to safeguard users' data and transactions, educating users on scam detection, and support staff on best practices to handle security-related challenges. High security awareness is 10x more likely to keep a financial customer, than any other thing. Therefore, security must be catered to to ensure stability.
Tokenization holds exciting promises for the future of finance and ownership. However, this future depends on increased adoption, blockchain maturation and clearer regulatory frameworks to attract institutional participation. With these, we shall witness a wider range of asset tokenization, interoperability in terms of asset use (both digital and real life), advanced smart contracts, and the global adoption of decentralised finance (DeFi).
Although certain challenges still confront this future, embracing its ethics and preparing for its advent is a key move for financial companies looking to contribute to maintain relevance for extended periods of time. With the full realisation of tokenized finance's potentials, more people will prefer it to traditional proof and means of co-ownership.
