“Banks may never go completely obsolete, but they will take a massive economic hit if they don't start to transform soon.” This was the sub-headline for Entrepreneur’s column titled, The 5 Ways Banks Must Transform to Thrive in an Era of Cryptocurrency.
In the article, they first established cryptocurrencies’ possible disruption on financial institutions and the bank’s key strengths that still sets it apart from the more advanced technologies. And they concluded with the compromises banks should do to keep up with the digital currencies.
But should banks really adapt to the cryptosystem? Let’s break down Entrepreneur’s shortlist of the 5 transformations banks must implement in conforming to cryptocurrencies:
- Monitoring, understanding, and acceptance
Since cryptocurrencies are an actual threat to banks should it make a drastic boom, they must really take it seriously. Learning and organizing details about it, keeping up with its developments and fully accepting that they are here to stay is a major step that banks should be doing in preparation for the future of cryptocurrencies. Understanding the cryptocurrencies may also give these financial institutions positive insights and fresh ideas that may lead to new innovations on their part.
- The addition of blockchain products
Incorporating blockchain in bank systems is not only a way to conform or survive in the midst of cryptocurrencies. It is also a very wise decision to make especially since money is a serious matter that needs serious attention, transparency, and security. And we know that blockchain is an expert on that. Hiring blockchain developers, and investing in blockchain products will gain banks momentous lead and positive change. And some banks are already doing this nowadays.
- Drastic reductions in fees and exchange rates
Since cryptocurrencies run on the blockchain and go peer-to-peer, cutting middlemen, fees are way cheaper than bank fees. If banks want to stay as the money keeping choice for people, they have to eliminate or at least reduce their fees. A blockchain system would no doubt help in this.
- Specialization and downsizing
“Banks may also find themselves unable to compete with crypto in all areas,” as Entrepreneur said. In this case, they have to build new core competencies that will set them apart, where they could specialize and that cryptocurrencies cannot offer.
- More personalized products and guidance
As cryptocurrency lets people handle their own finances and makes them manage their own money, this may pose too much responsibility for people and not all would be up for it. So financial institutions could cater to these set of people, only this time, making their accounts more personalized, yet still managed by the bank. They could also offer more specific guidance and a sit down where bank employees actually address their customer’s problems and guide them through the process. People who are confused love their questions to be answered right away. Physical support and solutions like these would make banks a lead choice for people who know little about technologies and can’t stand talking only through online support.
In the end, as the world progress, people, institutions, organizations, the government, and all other elements of the world must progress as well. Today, cryptocurrencies are already known and people who use it and are into it just wait for the final push to its mass-adoption. And if this happens, banks do not need to fight against crypto. If banks want to survive it all, all they have to really do is have their systems in congruence to cryptocurrencies.