The showdown between neobanks and cryptocurrency exchanges will be fierce, as a large number of banks are looking to dabble in cryptocurrency offerings. In return, the exchanges have begun offering the traditional banking services of lending and borrowing and issuing credit and debit cards.
Mark Daly, VP of Growth at Zero Hash, a crypto service provider, told Pymnts.com that he sees over half of the largest neobanks exploring crypto offerings for their customers. According to him, the data is staring the financial institutions in the face and reveals a large chunk of market share is up for grabs.
Part of the data that forms Daly’s theory is the number of customers sending sizable sums from the banks to cryptocurrency platforms. Daly pegs the number at between 20-30% which is over one-fifth of their users, and he believes that this demographic will be the core of the early users.
He noted that beneath the numbers is a trend of cryptocurrency exchanges encroaching on the turf of the banks. “That’s because they’re chasing after those high-value products – credit cards, lending, and borrowing,” Daly said. “They’ve reached for these high-value products that traditional banks or neobanks would’ve offered in the past.”
The rewards of dabbling into crypto
For Daly, neobanks stand to gain significantly from a foray into cryptocurrencies. He cites the industry-wide figure of 30% engagement from the early users. This is intricately linked to the benefits of an increased client base for the neobanks as they ride the wave of crypto’s soaring popularity.
Neobanks can augment their revenue by adding cryptocurrencies to their offerings. Charging a percentage on transactions would undoubtedly help the struggling firms, plus the added window to push other products.
Daly notes that cryptocurrencies are the future, and it would be a step in the right direction for neobanks to embrace crypto. He asserts that they will play a big part in things like cross-border transactions, payments, and even monetary policies.
Crypto offerings have to be complex to attract users
Cryptocurrencies are innovating at breakneck speed and for neobanks to keep and attract customers to their crypto products, they will have to keep up with the tide. Daly thinks that it will be beyond the mere selling of cryptocurrency products and will include offering users access to decentralized finance (DeFi) and Non-Fungible Tokens (NFTs).
The complexity will be largely determined by the demographic using the service. Although neobanks are playing catch up to crypto exchanges, they still have a fair shot at closing the distance.
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