For quite some time, huge banks and financial institutions have had a strong aversion to cryptocurrencies, with CEOs going as far as declaring them a fraud and listing them as a risk factor to competitiveness and profits.
However, Bitcoin Market Journal points out that the number of global crypto wallets had reached 42 million by December 2019, and financial institutions are now forced to forego their deep scepticism and dip their toes in cryptocurrency to keep up with the times. This has led to some interesting developments in the world of fintech.
In this post, we’ll look at how financial institutions are approaching cryptocurrencies and blockchain tech.
Blockchain applications are known for being able to process payments in real-time — and it does this without compromising your information and data. The reason behind this is that the distributed ledger technology circumvents centralised institutions and allows users to transfer money instantaneously. Ripple is one great example of a crypto company that allows real-time settlements. Their technology allows corporations, banks, and individuals to transfer money without having to pass through a third party processor. But unlike Bitcoin, Ripple isn't completely against banks, as it is currently on a mission to create partnerships with financial institutions all over the world. Because of this, it’s poised to dominate the crypto payment tech industry in the near future.
Even the Bank of Korea has recognised the benefits of crypto payments, and has subsequently launched a 10-year blockchain and CBDC project to better oversee the regulation of crypto payments. With crypto payments, both financial institutions and individuals can spare themselves from long wait-times and exorbitant fees.
One of the easiest ways to get involved in blockchain and crypto tech is by investing in it. As more and more people show interest in crypto investments, financial institutions have been playing a special role in allowing people to enjoy easier access to cryptocurrencies. A post on digital content by FIS Global points out how enabling credit and debit card payments for crypto exchanges can promote cryptocurrency investments even more. Card-to-crypto services can increase awareness of and participation in crypto trading, especially since huge credit card industry players have shown interest in this blockchain application.
One credit card institution that’s using blockchain technology in payments is Mastercard. Recently, they’ve patented a technology that allows crypto transactions — whether it’s buying, selling, or paying in crypto — in credit card systems. Through this, they enhance the security and speed of transactions made on credit cards under them.
Financial institutions know the importance of maintaining and nurturing a customer base. Other than great customer service and reports of excellent performance, many institutions have also implemented blockchain-based loyalty rewards to entice more individuals to use their services. Additionally, the centralisation of a user’s loyalty programs in a blockchain wallet can encourage them to use their rewards on a regular basis.
In this regard, Sandblock, a French startup that aims to tokenise all loyalty programs, is helping small businesses to develop crypto and token rewards programs for their consumers. Sandblock’s goal is to the encourage mass adoption of cryptocurrencies, and through this program, they believe that more users — including even reluctant financial institutions — will join the crypto revolution in the near future.