The financial services industry is transforming, with consumers and businesses becoming more interested in using digital technology to handle their financial needs. Financial institutions (FIs) are evolving to meet consumers’ shifting preferences by offering a variety of digital solutions, from mobile check deposit to digital wallets. When it comes to cryptocurrencies, however, FIs are not currently meeting consumers’ interests.
According to PYMNTS data, nearly one in four Americans had owned cryptocurrencies at some point by Jan. 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 purchase bitcoin and other cryptocurrencies. Despite this consumer interest, crypto simply is not a top priority for many banks. For example, most banks do not have exposure to cryptocurrencies, and most FIs report having little interest in developing crypto offerings in the near future. Since cryptocurrencies are only becoming more popular, banks should reconsider their stance on 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 regard that as a top priority. Nearly two-thirds of banks do not consider crypto-related products and services to be a priority in their growth strategies over the next two years, according to data from the Federal Reserve. Furthermore, 63% of respondents said these products were not important to look into in the next two to five years. That said, when the time horizon expanded to 10 years, the share of respondents reporting that crypto-related products were not 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 firm, 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 clients with a single view 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 bank offerings is on the rise. Some FIs 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 Story, Quontic Bank’s Aaron Wollner spoke with PYMNTS on 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 they will likely buy cryptocurrency in the next year. There has also been remarkable 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 cryptocurrencies in general, but they are also actively interested in their FIs providing access to crypto in some capacity. One survey found that 60% of crypto owners would definitely use their banks to invest in crypto if given the option, while just 4% of the respondents said they would not use crypto-related investment services from their bank. However, the consumer interest in crypto is not translating into FI interest in crypto. According to a survey, eight in 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.
About the Tracker
The Digital-First Banking Tracker®, a collaboration with NCR, examines how banks are responding to consumers’ interest in crypto.