Although many consumers and finance pros still view cryptocurrency as little more than a speculative tool, that perception is gradually losing ground as crypto becomes better understood and gets pushed along by a COVID-19 tailwind, this mysterious medium of exchange is destined for the mainstream.
In a report published Jan. 10 by PYMNTS’ CEO Karen Webster, 2022 will be the year that businesses use a framework for separating activities spurred by a fear of missing the [crypto] wave to a focused examination of the technology and its relevance in solving the pressing payments and financial services problems people and businesses have today.
In surveying the crypto landscape, President of NCR Digital Banking Doug Brown and NCR Chief Technology Officer Tim Vanderham see opportunity. Despite the volatility of crypto, Brown said, “With banks [and credit unions] we’re seeing … a lot of interest, and it’s following that cadence, moving from speculative to strategy to execution. C-levels are now engaging and focusing on it because they’re getting inbound inquiries and customers asking for it.”
To illustrate how fast mindsets are changing, Brown and Vanderham related the story of a chat the pair had with a bank executive in 2021 who utterly dismissed crypto. Within six months, that same executive contacted NCR asking how quickly they could be up and running with crypto.
Vanderham said the present moment is about “going into their board rooms to say this is something that we can’t stay on the sidelines any longer, we need to move forward. When you start thinking about that outflow of money it is happening, it is leaving their front door. If these credit unions, these financial institutions want to be the trusted adviser for us as consumers or members of their institution, they need to be able the see the full landscape.”
That means being able to view one’s crypto balance as easily they can a checking or savings account and being able to use those funds as one would with a debit or credit card. For banks, credit unions and FIs, it’s crypto decision time, where winners and losers diverge.
As Brown said, “We know that billions of dollars are leaving financial institutions to go to third party wallet destinations. Fact. The number of people holding crypto in the U.S., depending on whose study you look at, is between 40% and 60% of the population, possibly higher. That’s why we’re getting bullish about it and why we do want to solve the use case piece. It’s moving from beyond its super hype cycle to a more practical execution phase.”
Banks Watch Their Flanks
As NCR positions itself for the pandemic era and after, bringing cryptocurrency innovation to banks and FIs that demystifies its stored value for all stakeholders is a core strategy. Fortified by its August 2021 acquisition of crypto software firm LibertyX, the NCR network can now support crypto transactions in ATMs, point-of-sale (POS) systems and cross-border remittances, making crypto holdings accessible and spendable for the average person while keeping banks and financial institutions (FIs) firmly in the loop of these transactions.
Vanderham said, “One of the reasons we acquired LibertyX was the notion that so many Americans are transferring dollars out to Brazil, Argentina, the Dominican Republic, the Philippines, etc. How can we leverage this rail to be more consumer friendly, and from an NCR perspective, more bank and retailer friendly? How can we enable it to be frictionless for bank members or cashed individuals at a merchant to transfer that money internationally as well?”
“Wherever the consumer is right now in the adoption [curve], one thing that is undeniable is that consumers do want to get [crypto],” Brown added, “and they want to get it from the name and brand they trust, which is their bank and their credit union.”
NCR and others have one eye on ambitious crypto plans and the other on regulators.
“At the macro level we’re clearly watching what the SEC is doing, what the FDIC is doing,” Vanderham said. “I met with one of the SEC commissioners at a crypto conference in Austin just a month and a half ago. Having those conversations, working through with banks that are on the forefront of it as well and how they go through OCC kind of reviews and approvals [is vital].”
Up and Away
Conceding that banks’ involvement with crypto up until now is primarily a wealth management and investment play, Brown — who bought holiday gifts with crypto in 2021 — noted that “you’re also starting to see the increased use case model that Tim was talking about with payments, and we get to the commerce side of the equation [where] it becomes more mainstream.”
Describing his own experience buying family gifts with crypto, he added that “It was cool for a nerd like me … but point being … at that time Bitcoin was at $60,000 not today’s $40,000, so it almost felt like free money as I was spending it. You can begin to see how that will alter the behavior, the desire to want to use it. And if there’s no friction … I think that’s when we’ll start to see it expand its use and relevance for the purpose of purchase.”
Beyond that, he talked about the role of crypto in the connected economy, which has immense potential. “We’re expanding the addressable reach of bank and banking on both sides of the equation, with the banks and then that population that is underserved,” Brown told Webster.
“That’s what’s pretty exciting from our perspective and lends itself to extending banking out into the commerce domain with retailers and other brands.”
With merchants, restaurants, banks, financial institutions, credit unions and consumers all seeking guidance on how crypto impacts them, Vanderham said, “If we can educate them, if we can help them see how to implement it and know that it’s through a trusted provider, it’s going to make all their consumers sleep better at night than going and figuring out for themselves.”