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Why you should partner with a crypto-friendly payment provider
The global market size for cryptocurrency stood at USD 754 million in 2019 and is expected to reach USD 1,758 million by 2027. The cryptocurrency market experienced significant growth in 2020, and as a result, many financial firms diversified their investment portfolios with crypto assets.
Bitcoin, the world’s largest cryptocurrency, increased more than 300% last year, reaching above $33,000 for the first time in history in January 2021. The overall crypto market cap also reached an all-time high this year when it jumped above $1 trillion.
It’s an exciting time for crypto companies, but the market is still in its infancy, and businesses may struggle to scale their cryptocurrency offerings without the right financial services partner.
Continue reading to learn more about how the current cryptocurrency market affects the financial services industry, and why it’s crucial to partner with a banking provider that understands crypto.
Is cryptocurrency the future of financial services?
While the crypto market has grown significantly in the last year, many traditional banks are hesitant to get involved in cryptocurrency until the market becomes more mainstream. However, more financial institutions feel comfortable backing cryptocurrencies that are tied to fiat currencies. JP Morgan recently launched its own cryptocurrency, stablecoin JPM Coin, which directly links to the US dollar.
Cryptocurrency also presents a clear opportunity for new banks, especially neobanks, to shake up the financial industry by offering technology supporting crypto, which traditional banks don’t have.
Long-established institutions often struggle to adapt to changes in technology, but these advancements are inevitable. Although central banks still seem to dig in their heels, it seems likely that they will have to embrace blockchain technology and digital currencies, like crypto, at some point.
Challenges for crypto companies
Aside from traditional banks resisting change, crypto-positive companies face some challenges when trying to scale their cryptocurrency products or services.
Limited functionality
To compete with online banking, Visa/Mastercard, PayPal or Venmo, cryptocurrencies must deliver at least the same features that people associate with them, including security and real-time transactions. While demand for Crypto is at an all-time high, most crypto applications do not meet the regulatory standards to offer the banking capabilities that users are increasingly after.
Evolving technology
Technology around crypto, such as blockchain, evolves at incredible speed. As more companies get involved in the space, new advancements will disrupt and change how crypto companies operate. Keeping up with this evolution trajectory will also affect how your partners and clients interact with you, and you can’t afford to play catch-up once it’s too late.
Trust
While the cryptocurrency market continues to gain traction in various financial activities, many are still reluctant to trust the underlying technology that supports the structure. Unlike fiat currency, crypto is not backed by institutions or legislations, which makes them perceived as riskier to some. The decentralised network can also make cryptocurrency vulnerable to crimes like fraud, scam projects and cyberattacks.
