Visa to help banks shape their crypto roadmaps

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Knowledge is power.

Conventional wisdom has it that traditional banks and financial institutions (FIs) have a lot to fear from cryptocurrencies, that bitcoin and other digital offerings will disintermediate incumbents and disrupt the financial services landscape.

In an interview with Karen Webster of PYMNTS, Visa Global Head of Crypto Solutions AJ Shanley and UMB Bank Executive Vice President and Chief Banking Product Management Uma Wilson said that a measured and systematic approach Developing crypto strategies can help FIs turn friction into momentum.

Visa, Shanley said, has attracted growing interest from clients covering some of the most fundamental existential questions about cryptocurrencies: how digital assets can and will impact an FI’s business – and how to get started. .

There may be a tendency to do something “massive,” Shanley said, but an optimal crypto strategy can only take shape with insight – gleaned from Visa’s own crypto experience.

To that end, Visa announced on Wednesday (December 8) that it is launching a Global Crypto Advisory Practice, an offering within Visa Consulting and Analytics (VCA) designed to help clients and partners advance their own crypto projects.

Interest is growing. In its announcement, Visa highlighted its own research which indicates that nearly 94% of consumers are crypto-savvy.

The first rounds of Crypto

While the headlines may make cryptos appear to be at an advanced stage of development, Wilson said it was still just the start. FIs are starting to understand that cryptos present more of an opportunity for core business than a threat.

She likened the move to cryptos to the shift from checks to electronic payments – a journey, not a sprint (although it should be noted that while past innovations in payments have taken place on regulated rails, crypto has it all. a series of regulatory issues taking shape). Likewise, the progression within the crypto space started with crypto-native companies and shifted to FinTechs. Now banks and credit unions (CUs) are starting to seize the potential of bitcoin and its brethren.

The advisory practice, according to Shanley, will help FIs looking to expand their customer base with crypto-related offerings, retailers looking to offer non-fungible tokens (NFTs), and central banks looking for paths to their own digital currencies ( called CBDC). In the United States, the companies said Wednesday, the Visa team is working with UMB Financial Corp.

Incumbent financial institutions would do well to start seriously thinking about crypto if they haven’t already. Shanley said 40% of crypto owners said they would be “very likely” to change their primary bank to an FI that offers crypto-related products within the next 12 months.

The findings are consistent with PYMNTS ‘own research which shows that 58% of multinational companies use cryptocurrencies, but only a fraction of FIs offer crypto-related services (although 73% of those FIs that do plan to do so). ‘add more).

Read more: 58% of multinational companies use cryptocurrencies

Leverage knowledge and expertise

As Shanley noted, Visa has been building its crypto expertise for several years and has built cross-functional and crypto-focused teams that include hundreds of Visa employees. He pointed to Visa’s announcement earlier this year that users of its cryptocurrency-backed card spent more than $ 1 billion in crypto globally on goods and services in the first six months of 2021.

See More: Visa Crypto Cards Spend $ 1 Billion

The company also said in its latest earnings announcement that in the quarter that ended in September, it had 60 crypto platform partners capable of issuing Visa credentials and had captured 3, $ 5 billion in payment volume so far this year.

Along the way, said Shanley, “we have developed extensive experience in functionality, from engineering to product, strategy, risk and compliance.”

The establishment of the advisory practice comes as inbound interest from corporate clients of the payments giant has grown, across the spectrum of its 15,000 FI partners, Shanley said.

“All of our clients should have a crypto strategy,” he said, adding that “every trader should also have an NFT strategy”.

To make this happen, it is necessary to have an advisory framework in place, giving clients an overview of crypto that starts with the basics and goes from there, adopting and adapting to bitcoin or stablecoins or NFTs. , depending on the use case. Shanley said that being better informed can also lead to another strategy: doing nothing. Some clients may decide to sit down for a bit and wait for a more opportune time to dive into cryptos.

A three-pronged strategy – and where it stands

It is perhaps not surprising that any crypto strategy begins with education, encompassing everything from understanding the key technical components of cryptos to testing use case.

Wilson of UMB Bank said that with the combined efforts with Visa, for businesses (especially FIs) developing their roadmaps into a three-pronged strategy, there is a learning curve involved in implementing place and execution of various crypto projects.

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NEW REPORT: TECHREG ™ CHRONICLE – DECEMBER 2021

About: This report represents the inaugural edition of TechREG ™ Chronicle. The regulation of digital companies appears to be one of the key issues of our time. Through this new publication, we seek to contribute to the debate and discussion about when, how and when not to regulate digital businesses and the key technologies they use.

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