Let’s Talk Debt Consolidation: How Does It Work?

As the financial space evolves, debt — be it personal or commercial — has become an indispensable leveraging tool for achieving desired aims. It is commonplace for a household to have multiple sources of debt from various lenders or creditors. From settling a student loan repayment to financing a purchase of a vehicle, people and corporations can be juggling multiple debts at any given time.

However, tracking all your debt can get confusing and stressful, even with proper management.

If you find yourself nodding in agreement to this, I have good news for you! There is a way to make multiple debt payments a singular and seamless process; debt consolidation!

Keep reading to find out just what this process is all about and how you can use it to make your life easier.

Debt Consolidation: The Basics

As the name suggests, debt consolidation refers to the process of merging (consolidating) multiple debts into a single, aggregated debt. Instead of paying several debts at varying dates, debt consolidation allows you to pool all your debts into one payment to a single lender, ideally at a lower interest rate. 

Debt consolidation can be used to pool debts such as auto loans, credit card payments, medical debt, payday loans, personal loans, student loans, and others. 

Now let’s be clear; debt consolidation is not a magic wand you can use to erase your debt at once. But it is a strategy that can make debt repayment easier and potentially cheaper.

Depending on how big your debts are and the structure, you can save hundreds or even thousands of dollars by paying lower interest. Debt consolidation can also help simplify your debt payment schedules. With only one debt to worry about, the chances of you forgetting to pay a debt on time can reduce. And this improves your credit score! 

Debt Consolidation Types

Broadly speaking, there are two kinds of debt consolidation loans. They include secured and unsecured debt consolidation loans. 

Source Google Images | Secured and Unsecured Debt


With this type of debt consolidation, the lender uses a tangible asset of yours, like your house, as collateral, to back the debt. If you, the borrower, is unable to repay the loan, the lender can sell the tangible asset to recover the funds owed.

Secured debt consolidation loans typically come with lower interest rates than their unsecured counterpart, as there’s almost no risk for the lender. Essentially, the borrower bears all the risk.


As opposed to secured loans, unsecured debt consolidation loans are not backed up with any tangible asset. To assess how much riskier this kind of lending would be, the lender will use the information on your credit report to assess how reliable you are as a borrower. With this method, failure or delays in loan repayments will damage your credit score and thus make it harder for you to get new loans or do debt consolidation. So make sure you repay on time!

Requirements for Debt Consolidation

By now, you must have figured out that creditworthiness (your credit score) plays a crucial role in securing debt consolidation. Having a stable source of income is another important metric lenders evaluate in assessing potential customers.

While the documentation needed might vary based on your credit history or lender, the most common document requirement for debt consolidation include an employment letter, a two-month statement for each credit card or underlying loan, and letters from creditors or repayment companies. 

After the debt consolidation plan is set up, the next course of action would be to select which debts you want to pay back first. Essentially, deciding on a priority order. This is usually decided by the debt consolidation facilitator or lender.

Logically, it makes sense to make the highest-interest debt top priority for paying back because that is the one that would cost you the most interest.

When to Consider Debt Consolidation

While debt consolidation brings notable ease and other advantages to pay off your debt, it is good to ask yourself if it’s necessary after considering the reasons you got into debts initially. For someone in a more stable financial position with predictable and sustainable cash inflows to pay off debts, opting for debt consolidation may make sense.

Source Shutterstock | Using Debt Consolidation

In some scenarios, it may be wise to hold off plans to consolidate your loans until you’ve secured the highest achievable credit score.

Of course, debt consolidation is only a good idea if you have the discipline to use your credit cards wisely without overspending. If not, you could accumulate more debt than you started with, causing instability and a strain on your budget. This could cause you to default on your repayments and hurt your credit score. 

How to Consolidate your Debt?

Described below is the standard procedure for consolidating debt:

Secure prequalifications

Many lenders allow you to examine their loan offers and other necessary information, such as the loan amount, loan terms, attached interest rates, loan fees, and expected monthly payments. Once done, proceed to your preferred lender’s website and get prequalified for the loan.

Compare Offers

After securing a position with a lender, it’s a good idea to get your hands on at least three loan offers to compare them and discover the loan package that gives you the best offer. One of the main considerations is to minimize the interest rate paid.  

Get Your Documents Ready

As mentioned in the ‘requirements’ section of this article, lenders usually request certain documents from potential customers to evaluate their creditworthiness and other useful information. Make sure to have all documents at hand before and upload them on the website where necessary.

Submit Formal Application 

After cross-checking all the details and entries for errors and omissions, submit your formal applications.

Pay Off Your Balances

Start the debt consolidation and pay off the balance to your lenders or creditors in a timely and organized manner.ments.

Implementing Automated Banking Transaction reconciliation and its challenges.

According to a 2020 Forrester Consulting survey, 65% of businesses report that reconciling payment transactions with open invoices is among the most labour-intensive business process. However, this issue can be mitigated by implementing automated banking transaction reconciliation.

AI-powered banking transaction reconciliation can help reduce expenses, improve accuracy, and even reduce—if not eliminate—labour costs. So, in this post, we’re going to discuss how you can implement the technology and show you how you can work around its challenges.

What Is Automated Banking Transaction Reconciliation?

AI-embedded banking transaction reconciliation is a powerful tool for that can simplify and streamline your organization’s payment process. While the transaction reconciliation is automated, it is still fully auditable by humans.

You can set up rules for allocating payments based on your company’s accounting system or other logic, enabling you to eliminate manual steps in reconciling data. In addition, it can identify discrepancies and irregularities in data entry for immediate correction.

Of course, since the entire reconciliation process is automated, you can cut down labour costs and save time.

We go through various payment transactions on a daily basis—from parking fees, a coffee at Starbucks, or phone bills. Every time you process a payment, the system will learn and establish bank rules to classify them automatically. The algorithm will then be able to determine how a transaction flows into the correct account and line item in an automated reconciliation.

What Are the Challenges of Implementing AI-Embedded Banking Transaction Reconciliation?

We know that automation brings a host of benefits, but implementing intelligent finance tech is not without challenges. Here are some of the issues you may encounter:

Data Security and Privacy

Data Security and privacy are major concerns that must be addressed when implementing intelligent finance technology. As institutions adopt automation, they will increasingly collect and store the data of their customers.

This data is extremely valuable and could be used by criminals or hackers to commit identity theft or other crimes. Financial institutions must ensure that customer data is protected from unauthorized use by implementing strong security measures.

Regulatory Uncertainty

There are no clear guidelines on how regulators should oversee these types of transactions. Moreover, it is unclear whether the current rules are sufficient. Financial institutions will need to work with the right governing bodies to ensure that any transactions conducted using AI technology are in compliance with applicable regulations.

Cross-Industry Collaboration

The development and implementation of AI technologies require the participation of a wide range of stakeholders, including financial institutions, technology companies, and regulators. Each of these groups has its own interests and priorities, and it can be difficult to reach a consensus on issues such as standards and regulatory rules for AI-powered finance.

Workforce Retraining

Since automated banking transaction reconciliation is a new process, you’ll need to retrain your employees. You need to educate them on how the technology can improve your business processes and financial services. Now, workers who are not familiar with AI-embedded banking may find it difficult to keep up with the rapidly changing landscape of the financial industry.

An Easy Way to Implement AI-Embedded Banking Transaction Reconciliation

As we’ve mentioned, automation has advantages, but implementing it comes with challenges. Thankfully, there is a tool that can simplify the entire process—Tirnu. With Tirnu’s AI-embedded system, you can automatically manage, monitor, and reconcile your banking transactions.

With the tool’s lightweight and user-friendly design, you won’t experience a learning curve. Within a few taps on the app, you can monitor expenses, organize invoice payments, and even manage your investments.

Because Tirnu’s AI tech learns your spending behaviour, you can cut down labour-intensive tasks and focus on more important matters.

Cryptocurrency and Traditional Banks United: Fintech Transformation

Cryptocurrency is all the rage right now. According to a Fortune Business Insights report, with a CAGR of 11.1%, the global cryptocurrency market is forecasted to grow from $910.3 million to $1902.5 million in 2028.

Of course, traditional banks are feeling the heat from their cryptocurrency-oriented competitors. After all, many tech companies are seeking to use cryptocurrencies and similar decentralized digital currencies to gain an advantage in the financial services marketplace.

This is a huge threat to traditional banks. Time may be running out for them to avoid being disrupted by these competitors. Challengers from the technology industry are moving in rapidly, and they are not afraid to use cryptocurrencies to take on the big banks!

Let’s take a look at how digital currencies are transforming the finance market.

How Bitcoin Is Transforming the Traditional Banking Industry

A PwC survey revealed that blockchain is widely used in various industries, including financial services, manufacturing, energy, healthcare, and even entertainment and media. The trend is clear: either support the cryptocurrency or be left behind the latest fintech transformations. Choosing the latter might not be the wisest business decision.

Now, when it comes to Bitcoin and other cryptocurrencies, traditional banks remain hesitant. But, that’s changing fast. Banks are starting to see the potential of these technologies and how they can be used to improve their offerings. Here are some examples:

Banca Generali’s Cryptocurrency Integration

Banca Generali, an $87 billion Italian bank, recently launched crypto-related services on its platform through a collaboration with bitcoin company Conio.

Banca Generali’s over 300,000 customers can now establish a bitcoin wallet in their bank account, thanks to Conio, a fintech company based in San Francisco. The business was founded by two Italians, with Banca Generali as an important investor.

Conio’s technology has been integrated with Banca Generali’s mobile banking app. So, everyone using the service can set up a digital wallet that may be used to acquire and sell bitcoins. A 2-of-3 multi-signature arrangement has also been implemented into the wallet for additional protection.

COO and head of innovation at Banca Generali, Riccardo Renna, said:

“We have been working with Conio on an innovative custody solution based on a multi-signature system that ensures the safekeeping of Bitcoins and the ability to recover the wallet in certain cases, such as succession. This is made possible because Banca Generali holds the third security key on behalf of the client, allowing them to recover their Bitcoins in case of need. We believe that this is the real strength of our proposition which sets us apart in the market.”

Hype Challenger Bank Is Following Suit

Another financial institution and a challenger bank, Hype, has adopted Conio’s B2B service to allow consumers to trade bitcoin. Hype customers may now transfer BTC to external wallets. Thanks to Conio integration, users can also retrieve backup and recovery data for their wallet’s private keys. Meanwhile, Banca Generali users are unable to move bitcoin into external wallets. Even so, it will hold the other two keys in the multi-signature setup.

SEBA Bank and Gold Tokens

SEBA Bank premiered the world’s first regulated gold token, which allows people to own real gold in a digital format.

Guido Buehler, the CEO at SEBA Bank stated,

Gold plays a major role in the capital markets. With a market cap of over USD 11 trillion, it offers investors a reliable hedge against inflation and a store of value irrespective of economic turbulence. The gold standard was once the economic unit of account across the globe, forming the basis of our international monetary system. With the launch of our innovative Gold Token, we are building on this history to allow investors to own a fully regulated digital form of physical gold for the first time. Physically redeemable direct from refineries on-demand at any time, our gold token removes the frictions of owning gold for investors and provides a cost-effective solution for owning the asset fit for purpose in the new economy.

It’s worth noting that SEBA Bank is a fully integrated, FINMA licensed digital assets bank platform. Now, it has issued a stablecoin that is backed by responsibly sourced gold, providing cost-effective access to the precious metal while establishing a new bar for the sector.

The SEBA Bank Gold Token is a watershed moment in investment opportunities, allowing customers to own a digital representation of real gold via a fully regulated, low-cost, and future-proof solution. Gold Token differs from traditional gold derivative investment instruments such as ETFs and OTCs. It allows investors to redeem their physical gold on-demand from participating refineries, which avoids the expense of transporting and storing the precious metal.

In addition to being a physically redeemable store of wealth, Gold Token can also be used as a stablecoin. Institutions are on the lookout for reputable and regulated counterparts to provide services in the sector. After all, the market has rapidly evolved to have a market capitalization of over $130 billion.

To meet the demand, SEBA Bank Gold Token can be used as a fully legitimate stablecoin in the digital asset markets. It can function as a store-of-value to protect investors from price swings—both in the conventional and cryptocurrency markets.

Regulators Are Trying to Keep Up with Cryptocurrencies

In the United States, the National Association of Attorneys General’s Consumer Protection Conference will take place in Washington, D.C., later this year. Hester Peirce, the SEC’s commissioner, addressed the topic November in 2021: “The view we are taking these days is that pretty much everything is a security.”

Regulators are still trying to figure out how to classify cryptocurrencies like bitcoin, whether they’re securities, commodities, or properties. Governing bodies are still deciding whether regulations should be applied differently and accordingly.

Wrapping Up

The big banks need to start taking cryptocurrencies seriously. They cannot sit back and rely on their traditional offerings to fend off these challenges. They need to embrace cryptocurrency and develop products that support it.

Traditional banks need to find the right mix of crypto offerings if they want to stay competitive in the financial services marketplace. After all, channels for purchasing cryptocurrencies are easily accessible these days.

For instance, people can use a digital banking platform like Tirnu to purchase and trade Bitcoin, Ethereum, and more. What’s more, this app’s AI-embedded technology makes it easier for users to manage their investments. So, if conventional banking institutions are unable to keep up, they’ll trail behind the latest fintech transformations.

What does crypto banking look like?

Since the first digital currency launch in 2008, there has been a massive surge in the adoption and use of cryptocurrencies worldwide. The crypto industry has grown significantly within ten years and now enjoys patronage from over 300 million people worldwide. As with other new and upcoming sectors, the crypto landscape offers several opportunities for its adopters to invest and grow wealth.

At its core, blockchain technology and cryptocurrencies were built to replace traditional financial institutions like banks by giving users direct control over their financial wellbeing. It was also designed to overcome barriers put in place by financial regulators to monitor and control traditional financial systems.

Bitcoin is making waves in the banking industry

In theory, that idea sounds very noble due to the overbearing nature of most financial institutions and financial policies enacted by governments and their agencies. However, when considered practically, the likelihood of a total overhaul of the current economic structure seems very unlikely in the short term.

As a result of this factor, many centralized exchanges operate and function under the laws and policies of governmental agencies in their different locations. In principle, these policies are similar to policies in place for guiding traditional banking institutions. However, we must clearly state that crypto exchanges do not serve as crypto banks.

Although these centralized crypto exchanges serve as a means for purchasing, storing, and selling digital assets, they can not be classified as Crypto Banks or Crypto Banking Institutions. They simply function as marketplaces for crypto transactions. As a result, there is a need to develop and launch financial institutions that will serve as crypto banks.

Much like traditional banks, Crypto Banks should offer their users banking services based primarily on cryptocurrencies. Additionally, these banks will provide their customers with access to a wide range of crypto products and services.

When considered critically, the concept of a bank exclusively for crypto assets may raise concerns over decentralization. It may also lead users to wonder: what does a crypto bank look like? How will Defi and Smart contracts work in a crypto bank? How will loans be delivered in a crypto bank? This article will discuss how to operate a crypto banking institution. We will also consider financial services available in the Defi space and how many of these can be incorporated into the crypto banking sector. However, before we define some of the features that ought to be a part of any crypto bank, let us briefly define crypto banking.

What is a Crypto Bank?

A crypto bank is a financial institution that offers a range of traditional banking services like deposits and withdrawals, savings, lending, and borrowing. However, instead of using fiat currencies, a crypto bank performs most of its functions using digital assets. Additionally, crypto banks offer their investors access to a wide range of crypto-based markets and instruments.

Although most of these functions can be attributed to standard banks, they don’t offer financial services based on cryptocurrencies. It is important to note that crypto banks must comply with governmental regulations and adhere to financial regulators’ rules to be legal. It is important to note that a crypto bank is very different from a crypto-friendly bank. Unlike a crypto-friendly bank, a crypto bank operates using digital assets for most of its operations.

A fully functional crypto bank solves several critical problems associated with blockchain-based crypto platforms. For example, these banks are certified and operate under the laws of regulatory authorities. Similarly, they offer users banking services like deposits and withdrawals, savings, lending, and access to numerous crypto-based marketing tools.

Some crypto platforms offer certain services to users. These include crypto checking accounts, crypto interest accounts, money transfer services, and lending services. These services can be classified under crypto banking activities. As a result, crypto banks should offer all of these services to their users. Let us briefly consider each of these services.

Crypto Checking Accounts

Crypto checking accounts are similar to a traditional bank account. These accounts allow users to store their digital assets free of charge. Users of crypto banks should have access to crypto checking accounts for storing their digital assets. Vast and Quontic are digital banks that currently offer these types of accounts.

Crypto Interest Accounts

A crypto interest account can be considered as the equivalent of a regular savings account. These types of accounts have much higher interest rates than traditional savings accounts, usually between 7% and 10%. Usually, crypto interest accounts are available of crypto exchanges like Gemini, BlockFi, Nexo, Linus, to name a few. This type of crypto service must be available in the portfolio of any standard crypto bank.

Multicurrency Bank Accounts

Like most banking institutions, some crypto platforms also offer multicurrency accounts to their users. However, these crypto platforms offer access to a wide variety of crypto assets that open multicurrency bank accounts. For example, Wirex provides multicurrency accounts and cards for cryptocurrencies and fiat currencies. Crypto Banks looking to offer this service can accomplish that by partnering with established payment platforms like Visa and Mastercard to ensure seamless exchange of digital assets for fiat currencies.

Money Transfer Service

In addition to offering its users different types of crypto accounts, crypto banks must also offer money transfer services and deliver a cryptocurrency payment gateway to their users.

Although crypto users can send their digital assets independently to other traders, having a reliable crypto bank can help safeguard the process and ensure maximum protection for crypto traders.

Adding these services to the portfolio of crypto banks will eliminate any uncertainty or reservations that traders might have regarding cryptocurrency. Furthermore, the users will have more payment options available to them.

Lending Service

Another essential feature that must be available in the portfolio of a crypto bank in crypto loans. However, this may prove to be a challenge due to the volatile nature of crypto assets. Crypto banks can imitate the structure employed by different lending services built of decentralized finance to deliver excellent lending services.

Some of the best Defi lending platforms include Aave, Mango, MakerDAO, Compound, and PhoenixDAO. By copying the example of these lending platforms, crypto banks can develop lending systems that allow their users to participate as depositors or borrowers.

Using this system, depositors provide liquidity by depositing their funds in exchange for earning rewards. Similarly, borrowers must deposit collateral before their loan requests are granted.

Crypto banks can arrange for collateral and deposits to be made using stable coins to prevent the loss of funds due to volatility. Similarly, these banks can partner with other Defi protocols to deliver the best lending services to their users.

It is important to note that, unlike traditional banks, crypto banks must build their lending services on smart contracts to ensure fairness to likely lenders. Additionally, these loans must be accessible to all users.

Crypto Banks And Decentralization

The idea behind the development of crypto banks is very noble. However, there are still questions over the feasibility of this concept when viewed based on the principles of decentralization.

There is no doubt that some decentralized services in a crypto bank can be based on the principles of decentralized finance. For example, crypto lending services could be built in these institutions as copies of various Defi lending protocols. However, at its core, crypto banks will function as a centralized platform similar to the operations of a traditional bank.

As a result of its centralization, most crypto banks will face problems and concerns that are currently attributed to traditional banks. For example, users of these banks may have concerns over hacks or attacks on their money.

Additionally, there will be concern over the impact of a banking collapse on users of crypto banks. Finally, crypto banking will remove the possibility of anonymity from crypto transactions, a feature currently guaranteed by many Defi protocols. These issues will be a significant barrier in adopting and using crypto banks by crypto traders looking for anonymity and decentralization.


Having banks dedicated to offering crypto-based services to their users will result in several benefits. Such banks will provide perks like a smooth user experience, more accessible partnerships with established financial platforms, and different financial options under one platform.

When all these elements are in place, clients can expect to receive quality service when they take advantage of any of the services offered by their chosen bank. Although not yet available, we expect to see the launch of a crypto bank that delivers a comprehensive crypto portfolio to users in the future.