The evidence is mounting that financial services clients increasingly want to use cryptocurrency to send and accept payments. For example, a recent Gartner survey of small business and middle market CFOs revealed significant uptake of crypto to send and accept payments, as illustrated below:
Financial providers are responding accordingly. A Gartner survey in February 2021 revealed that roughly 40% of financial providers are at least considering providing crypto-related services to their clients, a figure that is likely higher today given the growth in this space. Interest stretches across business lines. Consumer and business banking leaders are working to understand clients’ crypto needs and investing in pilot projects. Two thirds of wealth management providers are at least experimenting with, if not actively deploying blockchain, with crypto custody among the prime use cases. Use cases are also emerging in insurance as insurers increasingly move into underwriting crypto assets and businesses.
To serve the crypto needs of clients effectively, financial services leaders must first understand the challenges and opportunities associated with this new concept. Firms cannot effectively meet crypto needs without first understanding key questions that must be answered. Gartner experts have spoken with dozens of financial services leaders about the crypto opportunity over the past 6 months. At the highest level, financial services leaders wonder what it means to be a financial provider in a crypto-enabled world. More specifically, industry executives offered the following list of open questions about crypto that they are working to answer:
- What client problem(s) will the use of crypto solve?
- What is the role and impact of digital currencies offered by central banks?
- How might our investment in crypto impact other critical investments in new payments functionality?
- What are the implications of offering crypto services for client engagement and retention?
- How do you navigate the volatility inherent in cryptocurrencies?
Technology and Operational:
- Can our existing systems handle clients’ crypto needs, or do we need to modernize trading systems and/or portfolio management capabilities?
- Should we build, buy, or partner to develop and scale crypto-related capabilities?
- What are the operational implications of accepting payment in crypto?
- Do our senior leaders sufficiently understand crypto, including strategy, operational, and technology implications?
- Do we have sufficient skills at the senior management, mid-management, and junior levels to spearhead investments in crypto capabilities?
- What should ownership and governance look like internally to pursue crypto-related opportunities?
Risk and Compliance:
- How might the crypto regulatory framework evolve?
- How can financial providers manage risk to ensure that crypto transactions do not support illegal activities?
- To what extent do we already facilitate crypto transactions without even knowing it?
- Will crypto appeal equally across all segments and lines of business (retail vs. commercial vs. high-net-worth clients)?
- How will uptake and acceptance of crypto differ across generations of clients (Boomers vs. Gen X vs. Millennials)?
- How quickly might crypto move from an investment vehicle to a credible currency?
Clearly, there are many open questions associated with this emerging opportunity that financial services leaders must answer. We advise leaders to begin with the strategy questions. If crypto does not fit with your enterprise strategy, then investing to answer the other questions makes less sense. As you explore these questions, tap a variety of viewpoints from different silos and levels of seniority in the organization. A variety of perspectives will ensure that stakeholder biases cancel each other out. Be sure to capture as much unfiltered client voice on the topic as possible. And use scenario planning to explore how crypto might evolve.
For more information, click here to learn how to define and map cryptocurrencies, digital currencies and NFTs to facilitate your digital transformation. Use our scenario planning tools to systematically explore the future of crypto in financial services. And keep sharing your questions on crypto with us, to shape our research and support for you on this emerging opportunity. Please add your thoughts and questions to the comments section, or share them with your Gartner account team.
The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.