Don’t let the fear of missing out on crypto decision making

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Bitcoin ATMs have hit gas stations. Cryptocurrencies reach a market cap of $ 2,000 billion. Celebrities are rushing into the non-fungible token market. Card networks are launching crypto ramps in and out, including crypto reward cards. With the deluge of crypto headlines, it’s easy for financial institutions to get swept up in Fear of Missing Out (FOMO).

There are two steps to overcome FOMO crypto. First of all, we must answer the question: is there a risk of missing out by not acting immediately? The short answer is no. Time, regulators and technology partners are on your side. The ability to leverage crypto technology for financial institutions of any size is only getting easier. Thanks to advancements by technology providers, the addition of crypto services, such as bitcoin purchases and cross-border remittances on blockchain rails, is increasingly turnkey. Thanks to the potential revenue pools of the crypto-economy, there is a vibrant competitive landscape. Regulators are taking steps that are restraining the growth of the crypto economy to ensure consumer protection.

Second, are you addressing what might be missed by not taking action at all? The answer is twofold: one at the industry level and one at the financial institution level.

At the industry level, crypto technology is no longer immature. Bitcoin is almost 13 years old and launched in January 2009. The Cambrian period of use case testing is coming to an end and a Darwinian period of survival of the fittest begins.

In order to distinguish between the most lucrative use cases, it helps to apply the design thinking framework: proving value, feasibility and viability. Value equates to solving a problem and / or seizing an opportunity for customers. The feasibility applies to the technical and regulatory domain. Sustainability translates into scaling up and generating savings that are a sustainable win-win for the supplier and the customer. The banking and payments use cases stand out in value and feasibility, and are now moving towards sustainability. Use cases include trade finance, interbank payments, interbank messaging, cross-border transfers, and cross-border payments.

While the crypto-economy was born to provide the internet of elusive value – digital payments and transfers – it is proving to have the potential to provide a more powerful value proposition of superior liquidity management between transaction partners. Maximizing liquidity is easier to tackle than payments, in part because there are fewer counterparties. Blockchain technology allows network participants to reduce the number of their external accounts, consolidate their liquidity and manage intraday credits. Smart contracts – contracts whose terms are encoded in a blockchain – fuel trustless exchanges, reducing liquidity needs and costs. Digital assets improve currency liquidity in minor to major and minor to minor currency trading.

At the financial institution level, whether or not crypto technology represents a revolutionary competitive differentiation opportunity in banking transactions and payments is a function of the institution’s geographic footprint, revenue mix, ambitions growth and, ultimately, resources. Currently, if an institution has an interest – current or future – in services that support cross-border services, it should assign, at a minimum, one person to determine value, feasibility and viability.

But overcoming the crypto FOMO in the short term doesn’t mean that it’s safe to ignore the crypto space entirely. As long as there are unsustainable performance gaps between the digital economy and banking / payments services, investments and advancements in crypto technology and regulation will increase.

You should have two goals on the crypto economy: a short goal for use cases that matter to your business, and a long goal on the horizon of decentralized finance and the wider world of Web 3.0. For the short goal, turn on your news radar and watch for events. Ask your technology vendors to regularly update you on their crypto developments. For the long haul, monitor the mainstream accessibility of Web 3.0 and learn how to participate in a metaverse and transact in digital currencies with little risk.

Remember that 30 years ago some believed that a network like the Internet could exist. Twenty years ago, few believed that a phone could turn into a nearly everything device. Today, the equivalent is a cryptophone, a mobile phone that acts as a gateway to Web 3.0 and the crypto economy, which would pave the way for widespread access and enhanced functionality.

To conclude, when it comes to crypto, fear not and ignore. At a minimum, your business and your work have probably become more interesting thanks to advances in crypto. At the most, you could gain a decisive competitive advantage if you research and realize use cases that make sense to your institution’s ambitions.

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