Combining the traditional banking business with crypto finance

Banker and Crypto

Combining the traditional banking business with crypto finance

The cryptocurrency industry is getting stronger and stronger with every passing year. While most financial institutions and banks have tried to ignore it for as long as possible, this is no longer something they can afford to do.

Fortunately for them, there are plenty of options when it comes to combining traditional banking businesses with cryptocurrency finance.

But, before we discuss those, it is first worth noting different approaches that different banks make when it comes to crypto.

Approaching cryptocurrencies in different ways

In total, there are four different ways a bank can behave when confronted with the crypto industry. The first one would be to simply keep ignoring it completely, as they did so far.

Alternatively, the bank might still do nothing, although it could be willing to wait and watch how it develops and progresses. In the meantime, this would also give it time for internal development if it opts to prepare for potential integration.

The third option is something that most in the crypto industry would be pleased to see, which is basically gradual integration. Most banks that are crypto-friendly have opted for this approach, integrating one feature at the time, and trying to balance crypto finance and traditional finance as part of their services.

The last option would, of course, be for the bank to be all-in, and to fully commit to the crypto finance. This is not something that is encountered too often, and definitely not among larger banks.

These companies are set in their ways, and are usually skeptical about cryptos. Those that do go all in are usually younger firms that see large potential in the crypto industry, and are willing to take the risk of going full-crypto,

They can then offer payment services, custody services, credit cards, all of which are already well-established in the crypto industry. There is also wealth management and lending. which is still in early phases, although such services will likely be just as common as the other ones are.

Gradual integration is the most common crypto-friendly approach

For the most part, banks appear to be the most comfortable with gradual integration. The first two options are also often encountered, although the current state of the crypto industry seems to have caused many to worry about being left out.

Such fears have led the banks to consider gradual adoption, and one of the most common services that they are offering is remittance, usually in partnership with a crypto company. This is not surprising, as there is a lot of money that people send internationally on a daily basis.

Naturally, in this day and age, when speed is of the essence, waiting for traditional banking systems to process the money is not acceptable. This process usually lasts anywhere from a few hours to several days.

Meanwhile, with cryptocurrencies, the same payment can be processed within seconds, or even faster.

Then, there are also international fiat-crypto proxy accounts that could be useful products, as well as lending based on smart contracts.

Lastly, there are investment products, such as funds for crypto assets, which are also conceivable.

What will happen to the banks?

With crypto being mostly used for speculative trading these days, many have forgotten their true purpose and the reason why they were created in the first place. Cryptos, starting with Satoshi Nakamoto’s Bitcoin (BTC), came because the banks have failed the people they are supposed to serve.

Basically, greed caused a financial crisis which caused the entire world to suffer. In some areas, mostly in well-developed countries, the financial crisis was barely felt. In others, it left devastating consequences with which these countries still struggle today.

Cryptos came to take the power away from banks, but through their evolution, the two might just learn how to coexist and make the best of the situation. After all, banks already have a lot of experience with payments. They just need to be kept in check through transparency and greater levels of decentralization.

Alternatively, crypto will slowly start pushing the banks out of the financial business. Clients in need of banking services would receive blockchain-based service alternatives, and need fewer traditional banking services.

These services will be faster, they would arrive at a reduced cost, and they will enjoy the total transparency of the services they require. They would also be able to easily switch between different financial services providers, and find the one that fits their needs best.

As for traditional banks, their revenue will start to decline as a result. The crypto industry will prove itself capable of matching their service, without the need to go through lengthy and overly complicated processes that banks refuse to get rid of.

Since the banks need customers to survive, fewer and fewer customers over the following decades would mean that they would hold less and less power, until eventually, they might either learn to coexist with the crypto industry, or maybe even completely disappear, if they end up being unnecessary.

Of course, this is still in the future, and the banks are at the top of their game in this day and age. But, by looking at the situation from this perspective, it is easy to see why they might misuse their power, as well as why the crypto industry was so welcome from the clients’ point of view.

It might take years, or even decades for crypto and blockchain to put the banks in actual danger, although they seem to sense the possibility, which is why some have started to integrate crypto, and others are afraid of becoming irrelevant.

Conclusion

The crypto industry is here to stay, and that is becoming more and more evident. With that in mind, traditional banking businesses no longer have the luxury of just ignoring digital currencies. Doing so indefinitely would eventually lead to them being left behind, while flexible businesses that can change and adapt to modern technologies will prevail.

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