44% of surveyed bank executives plan to offer crypto services in 2022

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A survey by American Banker reveals that the number of banks providing cryptocurrency services will double compared to last year.

Key Points A recent American Banker survey reveals that 44% of participating financial institution executives plan to offer cryptocurrency services to retail customers by the end of this year. This would double the number of lenders offering blockchain-based services in 2021.

Despite the last brutal weeks that cryptocurrencies have seen – more than $1 trillion of value has been wiped from wallets – an unexpected segment of the market appears to be optimistic about the future of blockchain-based funds.

American Banker released its latest batch of forecasts for 2022 and its survey of 175 senior banking executives from regional and global financial institutions yielded surprising results. Before looking at the details of the research, it should be noted that American Banker magazine is highly regarded as a credible source of content related to banking regulation, technology and innovation.

Trends in crypto banking and wealth management for this year

According to the survey reading, blockchain and cryptocurrencies were major focal points in investment circles and received significant media attention in 2021. Rightly so considering the hundreds of millions dollars that poured into the non-fungible tokens (NFTs) and decentralized finance (DeFi) sectors last year.

Given these massive inflows, banks cannot afford to ignore cryptocurrencies or their customers’ requests to offer crypto services. Here are the main findings of the survey:

44% of bank executives expect to offer some form of crypto support to customers by the end of this year. This is more than double the number who offered these services in 2021. 60% of wealth management advisors surveyed expect their clients to increase their crypto holdings or start investing in these digital assets in 2022 A third of wealth managers expect to actively manage their clients’ crypto portfolio, compared to 13% who currently provide this service. Payments and transfers will matter more to consumers in 2022

Interestingly, the research revealed that bank executives believe that how consumers transfer their money and the different payment options available to them will also be a focus this year. It’s no secret that banks compete aggressively to retain customers and get more of their “share of wallet” by providing different types of services.

These services include automatic bill payments, direct deposits, low-cost money transfers, and bank-branded debit or credit cards. Not only can crypto projects do all of these services automatically, and cheaper than banks right now, but blockchain-based funds transfers have settlements that happen in seconds, not days. Additionally, several credit cards offer crypto rewards as a percentage of the card balance in the user’s preferred cryptocurrency. Banks that adopt just a few of these offerings will clearly differentiate themselves from their competitors – and the survey results show that banks are looking for competitive advantages.

Looking specifically at bank-branded credit cards, only 40% of banks plan to increase their investment in traditional credit cards with loyalty and rewards features over the next three years. The researchers suggest this could be a reflection of other competitive threats to credit cards, such as digital payment alternatives like PayPal and Venmo and Federal Reserve initiatives.

Interestingly, 25% of loan executives surveyed identified the Fed as a competitive threat to their consumer banking operations. The report specifically named “FedNow” – the Fed’s real-time payment service, which is an alternative to traditional bank wire transfers or automated clearing house (ACH) transfers, as well as potentially creating a central bank digital currency by the Fed. The Fed is the main lender to the banks and regulates trade finance operations – it is unusual to see it portrayed as a direct competitor to the banks.

Although no one can predict the future of financial business, the fact that global banks and lending institutions are seriously considering expanding their cryptocurrency and blockchain options this year cannot be ignored. The adoption of digital currencies by large financial interests would create a bright future for cryptos. You don’t need a crystal ball to see that.

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