The pandemic has changed everything about our lives and the way we interact with the world. From banking to retail, all that we knew about our society has changed. Businesses are finding new ways to mitigate the crisis and stay afloat, and banks have changed their operations and branched out in different directions to make it easy for their customers. One important transition that has been noticed in the banking sector in the early 2020s is the adoption of cryptocurrencies. A number of institutional investors and retail-banking clients have started showing an increased interest in cryptocurrencies and the technology underlying them (distributed ledger technology). Fintech firms, investors, and several other experts associated with the finance sector are resorting to cryptocurrency investments, and therefore, it is time for banks to use this opportunity as well. Cryptocurrencies are now being known as the future of money, and the finance sector cannot afford to ignore them anymore. With a number of cash optimization platforms on the market, banks can better analyze the trends in the finance sector and make informed decisions before foraying into the market of cryptocurrencies.
Banks and financial institutions have all the reasons to be skeptical and apprehensive about how they could use cryptocurrencies to be more successful. However, not exploring the domain shall only prove to be a missed opportunity. Cryptocurrencies have faced volatilities all their life, and especially this year amidst the pandemic. However, they are still vehicles that have brilliant prospects. They can outperform traditional banking products and services and offer greater transparency and efficiency. In this article, we shall look at the reasons why banks should leverage the benefits of cryptocurrencies and start using them for their success.
The Pandemic Has Made Cryptocurrencies Wildly Popular:
The lockdown resulted in people opting for alternative ways of banking since they could not physically be present at the banks to go about various banking processes. They started relying heavily on technology, and as a result, some of these banking and transaction apps failed due to overload. Cryptocurrencies stepped at this point with their high processing speed and low transactional fees and made it possible for customers to invest their money and use them for transactions, even amidst the lockdown. The prospects of cryptocurrencies never looked quite as attractive. Plus, recent years have seen several currency exchanges that have made transactions using these digital currencies safe and secure.
Many investors all around the world also started showing more interest in cryptocurrencies since they were apprehensive about the traditional means of investment. The economy has been in a precarious condition since the fag end of 2019, and investors needed alternate means to invest and secure their money.
Some banks followed suit and started resorting to cryptocurrencies to bring more flexibility in the banking options. Cryptocurrencies have started enjoying a fair share in the market, and investment portfolios and banks can jump on the bandwagon to leverage this opportunity and grow.
Cryptocurrencies Have Started Occupying Major Shares in the Developing Markets:
Cryptocurrencies have started enjoying quite a lot of success in the emerging markets owing to the volatilities of national currencies and outdated banking products. Plus, the global banking structure is also not as robust now as it was. This has led to the widespread adoption of cryptocurrencies, especially by countries like Mexico, Africa, and India. Young investors are showing more interest in cryptocurrencies as they ace new technologies. Working with cryptocurrencies is easier than fiat currency. They make for easier transactions, faster transfers, and all of these at very low processing fees.
Therefore, cryptocurrencies, as can be understood, occupy a major share in the market. Banks can make use of this opportunity to venture into a new area and expand into these emerging markets to reach out to more people. Investors and speculators have a keen interest in cryptocurrencies, and banks can leverage this interest to expand and grow.
Cryptocurrencies Can Help Challengers Cement their Position in the Market:
Even a few years ago, small companies never had the chance to gain a strong foothold in the financial sector or grow their reach since the big names in the market took up all the space and controlled the market. The financial sector was tightly controlled by regulators, who were, in turn, controlled by giant corporations. However, things have changed for the better these days, and there are multiple fintech firms, startups, cryptocurrency banks and exchanges that make it possible for these small companies to enter the market and gain a strong foothold.
These companies are now being able to attract new customers as well as drive the existing ones to themselves from traditional banks. Tech companies are also making hay while the sun still shines and venturing into the crypto market. One of the biggest examples of the stated fact is Libra by Facebook. Banks that want to survive the competition and grow in stature might want to adopt cryptocurrencies too.
The Crypto Market is Attracting All the Talent from the Conventional Banking Sector:
It is crucial for banks to understand that the crypto industry is drawing all the talent towards itself. Ten years ago, tech giants like Google, Amazon, and Apple would chase after IT professionals and specialists. However, there has been a refreshing change since 2018 as we can now witness the crypto industry chasing after these people. It is crucial for banks to jump at this opportunity and branch out in the crypto market, or they might have to risk losing their business. The crypto industry has become a hotbed for talent, and banks could use this to their advantage.
There are several reasons why banks should start resorting to cryptocurrencies and several more ways in which they can do so. Cryptocurrencies have always enjoyed quite a lot of popularity ever since their inception. However, the pandemic has made them even more popular and for good enough reasons, as we can see from the discussion. Therefore, if banks are to reach out to a larger audience and bring fresh innovations in the banking sector, they must opt for cryptocurrencies and explore their potential.