Banks have been the big shots on the financial playground dating back as far as the 14th century during the Roman Empire. In the centuries following, banks developed into a societal pillar of financial stability, responsible for foreign exchange, money lending, transfers, and credit systems. It’s no wonder then, that with the rich history and long lineage of ancestry that banks boast, that they are reluctant to include the new kid on the block: the crypto industry.
Banks are very regimented institutions embedded with a strong network of safety regulations and bureaucratic measures. After the financial crisis of 2007, banks became subjected to an even tighter grip on security and a less-than-flexible regulatory culture. In contrast, the crypto industry is unregulated, novel, and lacks the experience that banks have to back them up. For this reason, banks are hesitant to join forces with crypto, creating a culture of friction, rather than inclusion.
Banks are still trembling in the after-shocks of the economic blow of 2007, causing them to retreat further back into their safety zones. Innovative technology and new ideas may seem like a hurricane threatening to tip the fragile boat of banking that is struggling to stay afloat. The fact that the crypto industry is not only novel, but also unregulated, poses a threat to banks, who are fearful of ending up with major fines due to failure to comply with the rules.
Posing an even further challenge toward inclusion of crypto culture is that banks rarely act alone. Most banks have correspondent banks checking up on them to make sure they are doing their job in an orderly and predictable fashion. Each decision that banks make must be approved by their correspondent, who often times acts like a strict parent exerting their authoritative influence over their offspring.
It really is a shame for both sides that acceptance of crypto and Blockchain into the banking world has been slow to barely existent. Crypto has much to offer banking by solving their fundamental problems efficiently, as well saving and earning banks a great deal of revenue. Crypto infrastructure can not only help banks make more money, it can also help them save money by simplifying and digitalizing tasks that banks now outsource and pay large sums of money for.
By rejecting the crypto industry, banks are missing out on an opportunity to earn more money in the future from existing clients. While industries around the world are adopting Blockchain for data transferring and logistical purposes, the pressure amounts for banks to do the same. This is not the case however, and banks continue to hold on tightly to rigid and outdated methods. This creates a gap in the investor relationship due to the bank’s failure to meet consumer needs.
Undoubtedly, banks are beginning to flounder as the times change. Branches are continuing to close, and banks are making desperate attempts to create newer services to cater to their customers’ needs. The irony is that while banks are struggling to adapt, they stubbornly remain stuck in their old protocol, refusing to include the crypto industry, which might just be exactly what they need.
It’s time that banks keep up with the times and get with the program. Crypto is the way forward for banks and a lifeline that shows promise toward long-term survival.