Cryptocurrency, as far as Gen Z is concerned, has a place in the future of finance.
GOBankingRates’ Best Banks 2023 survey revealed that more than a quarter of Gen Z respondents think having their bank affiliated with a cryptocurrency exchange or platform is important.
While crypto experienced significant setbacks in 2022, the outlook appears to be brightening. Bitcoin briefly topped $23,100 and is now up around 37% since the start of January. If more than a quarter of Gen Z sees the potential of crypto in the banking sector, what does this mean for the future of finance?
Opportunity To Recognize Digital Currencies
In the SAS-sponsored global survey Banking in 2035, 500 banking executives worldwide were surveyed about the trends shaping the industry over the next decade.
The digitalization of financial services and adoption of emerging technologies topped the industry’s greatest opportunities, cited by 55% of respondents. Following closely in second place — 49% of respondents — was the emergence of digital currencies.
A digital revolution is coming. Moreover, the disruption is being recognized as an opportunity even if the sentiment among bank executives is one of cautious optimism.
The Next Crypto Iteration: A Hybrid of Web2 and Web3
What does this digital revolution look like within a banking institution? Marc Arbones, founder and editor at Altcoins Mastery, said the next crypto iteration will be a hybrid of Web2 (aka social media) and Web3 (blockchain, etc.). More institutions will accept, and offer, cryptocurrencies to customers.
This is good news for millennials and Gen Zers, as well as digital currencies becoming more mainstream as alternative investments. Arbones said traditional banking institutions and Web2 are slowly embracing cryptocurrencies.
“I see a combination of Web2 and Web3 emerging,” Arbones said. “It will take some time to transition to a fully decentralized banking system.”
Banks Will Need To Incorporate Cryptocurrency Into Their Services
The more Gen Zers and millennials diversify their retirement portfolios with cryptocurrency investments, the more necessary it will become for banks to pay attention. David Kemmerer, co-founder and CEO of CoinLedger, said it will be important for banks to incorporate crypto into their services.
“Gen Z is looking to integrate crypto as part of their investment and retirement plans,” he said. “Millennials and Gen Z have started investing in cryptocurrencies outside their traditional asset classes. Banks should find a way to support cryptocurrencies as a strategy to capture millions of Gen Z customers.”
While most banks are not selling crypto directly, some already have begun to support customers who want access to digital currencies. Ally, USAA and Chime are among the banks that serve as intermediaries to crypto exchanges.
Will Banks Succeed by Offering Digital Currency?
In a word, yes. As banks become affiliated with a crypto exchanges, Kemmerer said, more finances will be held in cryptocurrencies rather than cash. This type of affiliation is exactly what Gen Zers polled by GOBankingRates want to see as part of their banking experience.
What banks will need to carefully focus on, Kemmerer said, is their ability to strike a balance between protecting customers’ privacy and addressing illicit finance. The growth of crypto in the banking industry also might be limited by regulatory concerns.
If banks can strike this balance and leap over the hurdles, Kemmerer said they are likely to experience success. Banks will be able to offer digital currencies to their clients — an important offering for the growing number of Gen Zers who perceive crypto as an investment vehicle.
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