Almost a decade ago, financial institutions, including banks, and most consumers were outrightly skeptical of the legitimacy of cryptocurrency. Fast forward to today, and cryptocurrency is everywhere, rapidly making its way into the mainstream – from LA’s iconic Staples Center now being renamed as Crypto.com Arena, to one of the country’s top politicians, Mayor Eric Adams of New York City, having his first paycheck converted into Bitcoin and Ethereum via Coinbase.
Roughly half of all US crypto traders got into the market only last year, and over 300 million crypto accounts exist worldwide today. But, if 2021 was the year cryptocurrency was adopted into the mainstream, 2022 is looking like the year cryptocurrency will be regulated. Only a few months into this year, and already, governments are prioritizing the regulation of the crypto space in their agendas – with the Treasury calling for regulation of crypto intermediaries and stable coins, and the CFTC asking Congress for greater authority to regulate crypto assets on which derivatives are based.
While cryptocurrency regulation is still in its nascent stages, the truth is industry regulation particularly around AML and KYC compliance, data privacy, and consumer protections, will only help further ensure that the industry continues to grow and attract an even wider base of consumers. This, however, means that banks need to be prepared for these upcoming crypto regulations, and invest now in updating their internal processes, systems, and controls, to guarantee they can quickly and flexibly pivot at moment’s notice once regulation is passed as well as when it evolves down the line.
Many consumers currently log into several different platforms to check in on and handle the full gamut of their financial needs – their loans, credit card payments, mortgage payments, deposits, etc., which can not only become unnecessarily tedious and complicated, but also open them up to greater vulnerabilities than need be, as different platforms retain different pieces of data, and employ different compliance controls and systems. Add cryptocurrency payments and products into the mix and the complexities between platforms will only grow.
For this reason, banks need to invest now in a solution that can streamline and unify all products, business lines and functions end-to-end, so that they can engage with their customers in an optimal manner – through a single entry and exit point, with as full and accurate of a profile as possible. In this way, banks can minimize the chances of gaps within their systems that might prevent them from detecting an issue and are able to maximize their ability to engage with and protect their customers across all of their functions.
Such a solution must also be technological, as more of our world, particularly in response to the COVID-19 pandemic, accelerates its digital transformation and goes online. Backbase’s Engagement Banking Platform is one such solution that provides the singular digital platform that banks need to first play catch-up as needed, streamline their current operations, and eliminate inefficiencies caused by legacy systems. It also enables banks to then get ahead of the game and prepare for inevitable technological and subsequent regulatory change in the future head-on.
In a year where cryptocurrency will only become more mainstream, and regulatory action will most certainly follow, banks must ensure they can remain compliant and better protect their customers by investing in a singular, digital solution that unifies their business end-to-end.
