In recent years, banking has undergone the most extensive restructuring process in its history. A process in which the foundations of its business model have sometimes been affected.
Banks have had to accelerate their digital transformation process and rethink their structures, due to an increasingly competitive financial sector, with a negative interest rate environment, and most importantly, with a technological disruption promoted by fintechs. These companies, half financial institutions, half highly skilled IT teams, have come to market powered by artificial intelligence, operating in all asset classes including crypto, and using powerful algorithms capable of automatically replicating processes that in traditional banking would require large amounts of capital resources and human intervention.
This is the perfect storm: when an institution, suffers a drop in profitability and a decline in turnover due to increased competition.
But perhaps the traditional financial sector is not realising that in its enemy it may have its salvation.
Today, in the world of crypto-assets, brokerage fees and spreads are even higher than the fees charged by banks in those golden years when they had little competition.
Crypto traders are used to intraday volatilities of more than 10%, mining fees in the order of hundreds of euros per transaction, fees for using the debit card linked to their wallet, custody fees, and huge spreads between bid and offer when they wish to trade.
These types of fees seem unimaginable nowadays in the traditional financial sector, but if banks embrace this type of crypto-asset custody and trading services, they could once again see spectacular figures in their P&L accounts and a comeback to the double-digit returns of the past.
Banks may still be expecting a clearer regulatory environment, but waiting until the arrival of MiCA (markets in crypto assets regulation) in 2024 could be a serious disadvantage for those institutions that do not “jump on the train” as soon as possible.
The approach in the first instance is clear: consider crypto as digital assets, only for professional clients, as a way of diversifying their portfolios, understanding the particularities of these products, and knowing how to manage their enormous volatility.
There is currently a growing demand for these products, not only among individuals but also in large volumes for institutional investors. In 2021 alone, USD 9 billion entered the institutional crypto environment. According to a recent study, 90% of investors plan to enter this market in the next 5 years.
