Digital currencies go mainstream – How to prepare?
As interest and demand from consumers and businesses grows, the cryptocurrency market capitalization touches US$2 trillion1 and governments look at the issuance of their own digital currencies, many financial institutions are looking at the implications of digital currencies for their own business – and the potential to provide related products and services.
In this paper, Visa Consulting & Analytics (VCA) introduces digital currencies, considers the opportunities and the vulnerabilities for financial institutions, and sets out a plan for any financial institution to get more deeply involved.
Why financial institutions need to care now?
Given the sheer scale of digital currencies, the level of interest in them, and the wider adoption from both traditional and non-traditional ecosystem players, this is a trend that is making its way into the financial mainstream. There are three main reasons why forward-thinking banks must pay attention:
Reason #1: Digital currencies are too big to ignore
Reason #2: Digital currencies offer functional benefits
Reason #3: Digital currencies bring the potential for new revenue streams – as well as vulnerabilities
Led primarily by the fintech community, several proven use cases have now emerged. These currently revolve around four main themes: Exchanging Crypto Currencies; Crypto Card Rewards; Digital Platform; and Consumer Payments.
A three-step action plan for financial institutions
Step #1: Develop a crypto-focussed strategy
Step #2: Invest in the necessary technology and operations
Step #3: Define your go to market approach
How Visa can help?
Visa can help in several ways including serving as a bridge to connect our network of clients to new digital currency products and blockchain networks. To this end, Visa has forged a wide range of partnerships, is extending settlement services to digital currency transactions, and making it easier for clients to offer digital currency capabilities by building the Visa Crypto APIs.
A digital currency innovation lab has also been established to help clients and partners discover, co-create, and build digital currency concepts and pilots.
“Visa Consulting & Analytics is ideally positioned to work with clients to help formulate a digital currencies strategy, capabilities assessment, business case, and go-to-market approach, including build-partner-buy considerations. Bringing together different capabilities and assets from Visa, we can assist in areas such as product development and launch, innovation and design, and marketing strategy and execution”, explains Walter Lironi, Head of Visa Consulting & Analytics, CEMEA, Visa.
1 Crypto market cap surges to record $2 trillion, bitcoin at $1.1 trillion, Reuters, April 2021: https://www.reuters.com/article/us-crypto-currency-marketcap-idUSKBN2BS1I7
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