Banking on Bitcoin for the Win

The topic of cryptocurrency has sparked many conversations across the world of banking and fintechs; these conversations have varied across the spectrum but what is only growing louder, is the attention of which it demands. It’s no surprise that the regulators then began to issue regulatory changes in 2020 to enable a more integrated relationship between crypto and banks. Our financial industry leads the world because of the balance of innovation and compliance. It’s obvious that Bitcoin has reached the beginning stages of mainstream adoption and now it’s time every American has the option to rely on the strength of their bank to play the leading role.

 Cryptocurrency is and will continue to evolve, but now it’s time for banks to engage. Perhaps what’s most important about this moment, is that in doing so, a win/win is created for banks and consumers.

While still in the early stages of its evolution, cryptocurrency is here to stay and now is the time for banks to explore its applications 

We are pleased to announce our partnership with NYDIG, the leading technology and financial service firm for Bitcoin.

Why Community Banks Need a Crypto Strategy

Trusted Advisor

Community banks have always played a leading role in helping consumers and small businesses understand the financial world. They are a go-to source for education around topics like interest rates, mortgages, and loans among other things. Many banks provide financial education services and materials to their community. People want to understand cryptocurrency and their bank should be the source of that education. The role of trusted financial educators can’t be abdicated to the media. Community banks can further reinforce the role they play in their community by meeting this need. After all, who wouldn’t love to be able to call your local banker and get bitcoin 101?

Consumer Demand

Consumers and businesses want to own bitcoin. Recent market data reveals just how widely this truth spreads. 17% of PayPal users bought bitcoin through them in the first month it was offered. To make the math easy, PayPal has 220M American customers...that means over 15% of Americans bought bitcoin last fall through them alone. We can turn to Square’s CashApp to see they generated $875M of bitcoin revenue in one quarter alone. (That’s a lot of non-interest income, which we will come back too.) Companies like MassMutual, MicroStrategy and Square have bought all bought bitcoin and consumers are leveraging their IRA’s to buy bitcoin through funds like Grayscale or Skybridge. American’s own and want bitcoin and it shouldn’t be a shock that when trusted financial brands like PayPal or Square offer it, they see record adoption. When banks, the highest on the trust spectrum, offer bitcoin products, we should expect to see new records.

Good Business

By offering bitcoin related products and services, banks can serve their customers today that already own it and those that will because they can through their banks. Banks can help educate customers and banks can make bitcoin uniquely accessible through offering products like Alloy Lab’s Quontic Bank Bitcoin rewards program. And in doing so, banks can also generate a very strong ROI through taking a meaningful share of the non-interest income revenue stream related to the buying and selling of bitcoin. Banks have a responsibility to do good and to be safe and sound which also means profitable. 

Customers are already making moves that will be hard to untangle. Research commissioned by NYDIG showed 71% of respondents would change their primary bank to access Bitcoin related products. These would be hard customers to win back with a copy-cat product once the switch is made. 

Why We are Banking on NYDIG

Working with new entrants to the banking space almost always poses a challenge. Financial services are highly regulated for a good reason: financial institutions play critical roles for their customers and the overall stability of the financial system. 

NYDIG was built for banks from the start

Banking is not an afterthought for NYDIG. From the outset, NYDIG focused on the issues that matter to banks: regulation, compliance, security, technological integration and user experience. NYDIG’s “bank-first” approach sets it apart from others looking to play in the space.

This is no accident; NYDIG recruited Patrick Sells, formerly head of innovation at Quontic Bank and active Alloy Labs leader, to be head of Bank Solutions. Patrick understands banking, innovation and the power that comes from working with other Alliance members. “Alloy Labs was a critical part of my journey in banking and I couldn't be more excited for this partnership” said Patrick. “Alloy Labs and the banks that it represents are at the forefront of innovation in the industry. It only makes sense that they would be quick to embrace Bitcoin + Banking and help usher in this new age of innovation. NYDIG provides a white-labeled platform for banks to be able to offer these bitcoin products and services in a way that makes it very easy for them. For most banks, the bitcoin never touches their balance sheet.” A critical part of this relationship is the opportunity to co-develop solutions tailored to the needs of customers and the community banks that serve them.”

Our partnership with NYDIG provides the path community banks need to begin working with cryptocurrency related products and services. NYDIG brings unparalleled technology and compliance tools combined with a business model that enables testing without compromising on the ability to scale. 

NYDIG research shows over 80% of Bitcoin holders would move their currency to their bank if custody services were available. 85% would rather buy from their bank.

NYDIG allows community banks to provide the products their customers want and evolve with the market. The NYDIG partnership powers new products and strategies for banks and the customers that depend on them. NYDIG also provides the content and research banks and customers need to stay abreast of the evolving space; as part of the partnership, Alloy Labs will be developing more research, best practices and a Center of Excellence focused on the intersection of banking and cryptocurrency.

Want to learn more about how Alloy Labs works with partners? Check out www.alloylabs.com