The future of crypto in banking

The financial services industry is changing, with consumers and businesses becoming more interested in using digital technology to manage their financial needs. Financial institutions (FIs) are evolving to meet changing consumer preferences by offering a variety of digital solutions, from mobile check deposit to digital wallets. However, when it comes to cryptocurrencies, FIs do not meet the interests of consumers.

According to PYMNTS data, nearly one in four Americans owned cryptocurrencies at some point by January 2022. In response to the growing demand for crypto, the world is adding nearly 51 new Bitcoin ATMs (BTMs) — ATM-like devices that allow users to use cash to buy bitcoin and other cryptocurrencies. Despite this consumer interest, crypto is simply not a top priority for many banks. For example, most banks do not have exposure to cryptocurrencies, and most financial institutions report having little interest in developing crypto offerings in the near future. Since cryptocurrencies are only becoming more popular, banks should reconsider their attitude towards offering them.

The Digital-First Banking Tracker® explores how FIs are approaching crypto and how there are many opportunities for banks to leverage crypto to meet consumers’ growing digital needs.

Around the Digital-First Banking Space

Despite an abundance of interest in banks offering more crypto-related products and services, most banks do not see it as a top priority. Almost two-thirds of banks do not consider crypto-related products and services a priority in their growth strategies for the next two years, according to data from the Federal Reserve. Furthermore, 63% of respondents said that these products were not important to consider in the next two to five years. That said, when the time horizon expanded to 10 years, the percentage of respondents who reported that crypto-related products were not important dropped to 33%.

While most people do not currently adopt crypto-related products and services, some do. For example, French bank BNP Paribas – the largest private bank in the eurozone – intends to offer a custody product for bitcoin and other digital assets. The bank is partnering with METACO, a Swiss digital asset custody company, and Fireblocks, a digital asset infrastructure provider, to create this product. BNP stated in a press release that the product will be designed to provide customers with a single overview of all the different asset types for better transparency, operational efficiency and risk management.

For more on these and other stories, visit the Tracker’s News and Trends section.

Quontic Bank on the Uncertainty and Potential of Crypto’s Future in Banking

With nearly one in four Americans holding crypto at some point, interest in crypto-related banking offerings is on the rise. Some FIs are starting to implement crypto into their digital strategies, such as the bitcoin reward account offered by Quontic Bank.

In this month’s Feature Story, Quontic Bank’s Aaron Wollner spoke with PYMNTS about the bank’s crypto program and the future of cryptocurrency in banking.

As banks embrace Digital-First Banking, their crypto adoption has been slow

It is clear that consumers are increasingly interested in cryptocurrencies. For example, one survey found that at least 46 million Americans report that they are likely to buy cryptocurrency in the next year. There has also been notable growth in BTMs, with the global crypto-ATM market valued at more than $75 million in 2021 and expected to grow at a compound annual growth rate (CAGR) of 59% from 2022 to 2028.

Not only are consumers interested in cryptocurrency in general, but they are also actively interested in their FIs providing access to crypto in some capacity. A survey found that 60% of crypto owners would definitely use their banks to invest in crypto if given the opportunity, while only 4% of respondents said they would not use crypto-related investment services from their bank. However, consumers’ interest in crypto does not translate to FI’s interest in crypto. According to a survey, eight out of 10 FIs have no interest in offering cryptocurrency services to their clients. Given the widespread interest in crypto, banks should change their approach and develop their products and services to meet this interest.

To learn more about how banks are approaching crypto, read Tracker’s PYMNTS Intelligence.

About Tracker

The Digital-First Banking Tracker®a collaboration with NCR, examines how banks are responding to consumer interest in crypto.