The financial services industry is transforming, with consumers and businesses increasingly 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. When it comes to cryptocurrencies, however, FIs do not currently cater to consumer interests.
According to data from PYMNTS, nearly one in four Americans owned cryptocurrencies at some point in January 2022. In response to growing demand for crypto, the world is adding nearly 51 new Bitcoin ATMs (BTMs) – ATM-like devices that allow users to use cash to purchase bitcoins and other cryptocurrencies. Despite this consumer interest, crypto is simply not a top priority for many banks. For example, most banks have no exposure to cryptocurrencies, and most FIs say they have little interest in developing crypto offerings in the near future. Since cryptocurrencies are only growing in popularity, banks should reconsider their stance on their offering.
The Digital-First Banking Tracker® explores how financial institutions are approaching crypto and how there are many opportunities for banks to leverage crypto to meet the growing digital needs of consumers.
Around the digital first banking space
Despite great interest in banks offering more crypto-related products and services, most banks do not see this as a top priority. Nearly two-thirds of banks do not consider crypto-related products and services a priority in their growth strategies over the next two years, according to data from the Federal Reserve. Additionally, 63% of respondents said these products were not important to review in the next two to five years. That said, when the time horizon increased to 10 years, the share of respondents saying crypto-related products weren’t important dropped to 33%.
While most are not currently adopting crypto-related products and services, some are. For example, French bank BNP Paribas – the largest private bank in the Eurozone – intends to offer a custodial service 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 said in a press release that the product will be designed to provide clients with a single view of all different types of assets for better transparency, operational efficiency and risk management.
To learn more about these and other stories, visit Tracker’s News & Trends section.
Quontic Bank on the Uncertainty and Potential of the Future of Crypto in Banking
With nearly one in four Americans holding crypto at some point, interest in crypto-related banking offers is on the rise. Some financial institutions are beginning to implement crypto into their digital strategies, such as the bitcoin rewards checking account offered by Quontic Bank.
In this month’s feature, Quontic Bank’s Aaron Wollner spoke with PYMNTS about the bank’s crypto program and the future of cryptocurrency in banking.
While banks are embracing digital banking first, their adoption of crypto has been slow
It is clear that consumers are increasingly interested in cryptocurrencies. For example, a survey found that at least 46 million Americans say they are likely to buy cryptocurrency in the next year. There has also been remarkable growth in BTMs, with the global crypto ATM market valued at over $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 cryptocurrencies in general, but they are also actively interested in their FIs providing access to crypto to some degree. A survey found that 60% of crypto owners would definitely use their banks to invest in crypto if given the option, while only 4% of respondents said they would not use related investment services to their bank’s crypto. However, consumer interest in crypto is not translating to FI interest in crypto. According to a survey, eight out of 10 FIs have no interest in providing cryptocurrency services to their customers. Given the widespread interest in crypto, banks should change their approach and evolve their products and services to meet this interest.
To learn more about how banks are approaching crypto, read the Tracker’s PYMNTS intelligence.
The Digital-First Banking Tracker®a collaboration with NCR, examines how banks are responding to consumer interest in crypto.