Preparing for crypto: Ask the right questions first
As financial institutions think about their role in the crypto ecosystem and look for opportunities to provide crypto products, they should engage with their customers to understand how they want to interact with crypto.
Financial institutions should always center their customer within their crypto strategy
How do their customers, whether they are individuals or small businesses, want to engage with new digital assets and the technology behind them? How can banks support access to new assets that consumers want to hold? How can digital assets be used to improve business payments? Can specific new crypto technologies such as blockchain and stablecoins help with areas such as remittances for consumers or B2B payments for businesses? Then consider what it would take for a bank to integrate offerings into their core products.
Take for example First Boulevard, a digitally native neobank focused on building generational wealth for the Black community. In February 2021, First Boulevard announced a pilot program to integrate a set of crypto APIs from Visa to enable their customers to buy and sell bitcoin within their mobile banking app. First Boulevard customers will eventually be able to purchase, custody and trade digital assets held in partnership with Anchorage, a federally chartered digital asset bank. This pilot will also provide tools to increase financial literacy with cryptocurrencies and serves as a first step in supporting API capabilities that help clients access and integrate crypto features into their product offering; it is anticipated to launch later this year.
Visa expects to see more, similar crypto offerings developed in 2021 across the market, as more banks look to offer consumers access to crypto within their core experiences.
Partner for scale, security and speed to market
Alongside customer needs, a successful crypto strategy means determining which aspects to focus on in-house and when partnerships are better bets. Visa is focused on how we can help develop new products and solutions and serve as a bridge for our network of clients to new crypto products and blockchain networks. As one example of how public blockchains can connect to Visa in new and differentiated ways, Visa recently announced the first test transactions settled with Visa in USDC over the Ethereum blockchain3.
The space is moving incredibly quickly, and it can be challenging to keep up with the pace of innovation. There are many resources available to help clients navigate this exciting new ecosystem. Sheffield says “Over the coming years, the lines between crypto, fintech, and banking will continue to blur. Digital currencies represent fundamental innovations that financial institutions across the world will integrate into their core products to power new consumer experiences and payment flows.”
Forward Looking Statements
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1 According to research from The Block Crypto https://www.theblockcrypto.com/data/open-finance/stablecoins
2 According to research from Defi Pulse https://defipulse.com/
3 “Settlement” refers to the daily exchange of funds between Visa’s issuing and acquiring partners over VisaNet to exchange value for cleared and settled transactions—it does not refer to the movement of funds from individual consumer accounts.
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