Cryptocurrency Acceptance on the Rise in Banking

New digital investment and payment opportunities expanding in financial services

With JP Morgan Chase announcing its plan to broaden customer investment opportunities in cryptocurrency, U.S. banks and credit unions are investigating their options in the growing digital economy, even as regulatory scrutiny mounts. “By hopping on board the crypto bandwagon, JPMorgan can discourage outflows of its wealth-management clients who are interested in dabbling in cryptocurrency to fintechs like Robinhood and Coinbase and keep those clients inside of its ecosystem,” according to reporting by Business Insider. “A decision by the biggest banking player in the U.S. to offer broad retail access to crypto will help legitimize the handling of these assets by incumbents.”

Source: YouGov via Insider Intelligence, June 10, 2021

While the big bank’s move may demonstrate faith in the future value of the digital economy, Bitcoin – once the crypto standard-bearer – continues its volatile trading pattern in worldwide markets. For their part, consumers don’t totally get crypto, but they do want more digital options for their money, as evidenced by cryptocurrency’s growth in the payments space, along with NCR’s recent extension of purchasing options for 650 banks and credit unions. “By providing these clients a way to buy bitcoin – and eventually spend it – within their existing accounts, traditional financial institutions are part of a rising tide of companies in direct competition with cryptocurrency exchanges,” according to Forbes.

While the banking sector may have initially dragged its feet on cryptocurrency, that slow-walk approach may be coming to an end. “Watch for other established U.S banks to take action on retail crypto investing,” according to Business Insider.  “If JPMorgan’s move starts a trend, crypto trading could quickly transition from a nice-to-have to a need-to-have.” Further, younger generations’ influence on products and services in banking has traditional FIs looking at what challenger banks offer for customers wanting innovation. “[T]here is still a significant risk for Gen Z switching to fintech because they are very comfortable with fintech,” according to Karen Kislin, the strategic advisor at research firm Raddon.

Even if consumers don’t completely comprehend how cryptocurrency works, banks are beginning to offer more innovative investment and payment options in a growing and influential area of the economy. This demonstrates a customer-centric approach in financial services, where product mixes change as consumer needs shift and banks and credit unions play a critical role in financial education. Stay tuned as Believe in Banking continues to provide news and insights on the industry’s latest developments, including how the industry expands its consultation and advisory services to give consumers more value in their banking relationships.