Ways For Banks To Get Involved With The Crypto Industry

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The world of finance is going through an era of innovation capable of changing the way people transact these days. The development of cryptocurrencies and blockchain should be given credit for this. These two decentralized digital financial technologies have started impacting the traditional centralized banking industry worldwide.

Cryptocurrencies are already impacting our traditional centralized banking industry in numerous ways. Introduction to custodial services, hassle-free onboarding, and access to expert assistance, administration of AML/KYC regulations are some of the ways we have already discussed in our previous post.

However, the list does not end here only. Meaning, there are some more ways cryptocurrencies can impact the traditional centralized banking industry worldwide.

The list includes but is not limited to the following only:

  • Security concerns
  • Payments
  • Smart contracts
  • Industry trends

Let’s know about the way cryptocurrencies can impact the traditional centralized banking industry worldwide through these ways.

Security concerns

The hacking of personal wallets and exchanges is always a thing to worry about for many crypto holders. Therefore, reputed banks can help ensure foolproof security of virtual decentralized currencies from digital thefts or hacks to help users sleep peacefully every night. The introduction of cryptocurrency regulations could be a great way to criminal activity in this new decentralized form of finance.

Payments

Banks should think about leveraging the potential of blockchain technology and stablecoins for increasing the velocity of their payment process. Leveraging the potential of blockchain technology, banks can have a faster and affordable alternative for clearing houses for the processing of transactions.

Smart contracts:

Smart contracts help reduce the level of trust required between parties involved in the transaction process. It is because the success of transactions depends on computer-generated code instead of an individual’s behavior. The re-enforcement of this trust by banks could be possible with the utilization of smart contracts for the following:

  • Mortgages.
  • Commercial loans.
  • Letters of credit.
  • Other transactions.

Industry trends:

Rubbing shoulders with the latest industry trends or happenings could help banks get involved with the cryptocurrency industry. The takeover of Coinbase and Gemini by JP Morgan as banking customers, development of cryptocurrency funds by Fidelity, and allowance of cryptocurrency transactions by PayPal on its network are some of the best examples of it.

The Bottom Line:

Banks can focus on introducing guidance and regulation for cryptocurrencies. This will encourage more institutions to adopt this innovative digital decentralized financial revolution without anything to worry about. More importantly, banks should focus on making the most of the values cryptocurrencies can add to the financial experiences of people and the economy on a large scale.

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