Cryptocurrency and Traditional Banks United: Fintech Transformation

January 31, 2022

Cryptocurrency is all the rage right now. According to a Fortune Business Insights report, with a CAGR of 11.1%, the global cryptocurrency market is forecasted to grow from $910.3 million to $1902.5 million in 2028.

Of course, traditional banks are feeling the heat from their cryptocurrency-oriented competitors. After all, many tech companies are seeking to use cryptocurrencies and similar decentralized digital currencies to gain an advantage in the financial services marketplace.

This is a huge threat to traditional banks. Time may be running out for them to avoid being disrupted by these competitors. Challengers from the technology industry are moving in rapidly, and they are not afraid to use cryptocurrencies to take on the big banks!

Let’s take a look at how digital currencies are transforming the finance market.

How Bitcoin Is Transforming the Traditional Banking Industry

A PwC survey revealed that blockchain is widely used in various industries, including financial services, manufacturing, energy, healthcare, and even entertainment and media. The trend is clear: either support the cryptocurrency or be left behind the latest fintech transformations. Choosing the latter might not be the wisest business decision.

Now, when it comes to Bitcoin and other cryptocurrencies, traditional banks remain hesitant. But, that’s changing fast. Banks are starting to see the potential of these technologies and how they can be used to improve their offerings. Here are some examples:

Banca Generali’s Cryptocurrency Integration

Banca Generali, an $87 billion Italian bank, recently launched crypto-related services on its platform through a collaboration with bitcoin company Conio.

Banca Generali’s over 300,000 customers can now establish a bitcoin wallet in their bank account, thanks to Conio, a fintech company based in San Francisco. The business was founded by two Italians, with Banca Generali as an important investor.

Conio’s technology has been integrated with Banca Generali’s mobile banking app. So, everyone using the service can set up a digital wallet that may be used to acquire and sell bitcoins. A 2-of-3 multi-signature arrangement has also been implemented into the wallet for additional protection.

COO and head of innovation at Banca Generali, Riccardo Renna, said:

“We have been working with Conio on an innovative custody solution based on a multi-signature system that ensures the safekeeping of Bitcoins and the ability to recover the wallet in certain cases, such as succession. This is made possible because Banca Generali holds the third security key on behalf of the client, allowing them to recover their Bitcoins in case of need. We believe that this is the real strength of our proposition which sets us apart in the market.”

Hype Challenger Bank Is Following Suit

Another financial institution and a challenger bank, Hype, has adopted Conio’s B2B service to allow consumers to trade bitcoin. Hype customers may now transfer BTC to external wallets. Thanks to Conio integration, users can also retrieve backup and recovery data for their wallet’s private keys. Meanwhile, Banca Generali users are unable to move bitcoin into external wallets. Even so, it will hold the other two keys in the multi-signature setup.

SEBA Bank and Gold Tokens

SEBA Bank premiered the world’s first regulated gold token, which allows people to own real gold in a digital format.

Guido Buehler, the CEO at SEBA Bank stated,

Gold plays a major role in the capital markets. With a market cap of over USD 11 trillion, it offers investors a reliable hedge against inflation and a store of value irrespective of economic turbulence. The gold standard was once the economic unit of account across the globe, forming the basis of our international monetary system. With the launch of our innovative Gold Token, we are building on this history to allow investors to own a fully regulated digital form of physical gold for the first time. Physically redeemable direct from refineries on-demand at any time, our gold token removes the frictions of owning gold for investors and provides a cost-effective solution for owning the asset fit for purpose in the new economy.

It’s worth noting that SEBA Bank is a fully integrated, FINMA licensed digital assets bank platform. Now, it has issued a stablecoin that is backed by responsibly sourced gold, providing cost-effective access to the precious metal while establishing a new bar for the sector.

The SEBA Bank Gold Token is a watershed moment in investment opportunities, allowing customers to own a digital representation of real gold via a fully regulated, low-cost, and future-proof solution. Gold Token differs from traditional gold derivative investment instruments such as ETFs and OTCs. It allows investors to redeem their physical gold on-demand from participating refineries, which avoids the expense of transporting and storing the precious metal.

In addition to being a physically redeemable store of wealth, Gold Token can also be used as a stablecoin. Institutions are on the lookout for reputable and regulated counterparts to provide services in the sector. After all, the market has rapidly evolved to have a market capitalization of over $130 billion.

To meet the demand, SEBA Bank Gold Token can be used as a fully legitimate stablecoin in the digital asset markets. It can function as a store-of-value to protect investors from price swings—both in the conventional and cryptocurrency markets.

Regulators Are Trying to Keep Up with Cryptocurrencies

In the United States, the National Association of Attorneys General’s Consumer Protection Conference will take place in Washington, D.C., later this year. Hester Peirce, the SEC’s commissioner, addressed the topic November in 2021: “The view we are taking these days is that pretty much everything is a security.”

Regulators are still trying to figure out how to classify cryptocurrencies like bitcoin, whether they’re securities, commodities, or properties. Governing bodies are still deciding whether regulations should be applied differently and accordingly.

Wrapping Up

The big banks need to start taking cryptocurrencies seriously. They cannot sit back and rely on their traditional offerings to fend off these challenges. They need to embrace cryptocurrency and develop products that support it.

Traditional banks need to find the right mix of crypto offerings if they want to stay competitive in the financial services marketplace. After all, channels for purchasing cryptocurrencies are easily accessible these days.

For instance, people can use a digital banking platform like Tirnu to purchase and trade Bitcoin, Ethereum, and more. What’s more, this app’s AI-embedded technology makes it easier for users to manage their investments. So, if conventional banking institutions are unable to keep up, they’ll trail behind the latest fintech transformations.