By Mohamed Roshan
As the world shifts to a digital-first finance approach, neobanks and cryptocurrencies are giving traditional financial institutions a run for their money by better meeting customer expectations.
While traditional forms of finance and currency are unlikely to be abandoned any time soon, traditional banks and financial institutions will need to embrace technology and go the digital route to keep their relevance intact. The future is crypto.
To adapt to this massive paradigm shift, these financial institutions must first and foremost embrace new financial technology. This is a tipping point for banks, legacy and digital, whether they integrate crypto to survive or face the consequences and fade into oblivion.
While the price of Bitcoin and other crypto assets may have plummeted recently, there is a strong growth of investors who can look beyond price to these assets, understand their potential, and realize how digital assets like Bitcoin can act as both peers. medium of exchange between peers (P2P) and as a store of value for a rapidly developing decentralized economy.
But it's not a winner-take-or-all game: crypto and fiat they must and can coexist, at least in the near future. Without international coordination and some common standard operating procedures, the financial system could face a significant currency problem.
Building a bridge to cryptocurrencies
Businesses can embrace new technologies that can revamp legacy systems and successfully integrate crypto by executing blockchain transformation projects.
As banks modernize their tech stacks with crypto integration, this will ultimately help profitability and help them better evolve. An example of this would be how neobanks could use distributed ledgers to take care of transaction processing and reconciliation.
We have yet to see this in India, but it would be truly a game changer if established payment platforms could offer users the option to transfer crypto as one of the money transfer options alongside fiat.
Rising Customer Demand for Crypto
As cryptocurrency adoption grows around the world, users are demanding easy ways to access cryptocurrency. The vast majority of newcomers to the crypto space would find it more reliable to buy crypto from financial institutions that they are already a part of and trust, rather than having to go to a third-party exchange or wallet.
By integrating crypto solutions, neobanks can easily solve this and it also helps them stay competitive in this digital first world.
Banks have many possibilities and business use cases to choose from when entering this market: they could act as an exchange, custodian of users' cryptocurrencies, or provide other cryptocurrency-based services.
As contactless and mobile payments grow, and fiat loses its luster, cryptocurrencies are no longer just a fad.
The future is here, and it's hinting at the development of a more inclusive digital payment infrastructure, especially as countries around the world become more familiar with cross-border transactions, faster remittances, and a more compassionate space that doesn't need to depend on in traditional banking systems.
The real uncertainty does not lie in the risk but in the loss of opportunities. While regulation remains unclear, banks and other traditional financial institutions may not be willing to make the leap to cryptocurrencies. In India, the runs batted in He is vehemently opposed to cryptocurrencies and has issued regular warnings advising investors not to go into cryptocurrencies.
Therefore, several important questions remain. Will banks continue to see cryptocurrencies as a threat? Even if they don't, will banks be able to deliver the innovation their customers expect? Will they be able to successfully integrate these new technologies into their existing operations?
There is no playbook for this, but the financial companies that are the first to design and implement a workable approach will lead the industry.
It is very likely that the next few years will bring crypto and blockchain technology into the mainstream. Innovation in financial services is just beginning and is just one indication of the transformative potential of cryptocurrencies for all of humanity.
The author is co-founder and CEO of GoSats
Also read: FTX Ruin Will Lead to DEX/DeFi Boom
