COVID-19 lockdown, conflicts on the geopolitical arena, and political instability have all caused severe retractions from the global economy. As a result, we’re seeing the stock market down 3 quarters in a row, global recession knocking at our doors and inflation of an unprecedented scale in almost all countries. Along with it, discontent and distrust in traditional financial systems keeps rising. People who are dissatisfied with low interest rates in banks and stagnant government bonds start seeking other ways to save and gain money. So, they turn to crypto to either “buy the dip” and stake their assets to make some profit during the next bull run, or use other DeFi earning mechanisms to multiply their funds.
The most in-demand feature of current bank or neobank users is exposure to crypto trading, as 85% of crypto owners are interested in buying crypto from their own financial institutions rather than having to go to an exchange or wallet. On the other hand, it is in the interest of financial institutions to retain their users, avoiding them seeking third-party crypto exchanges, gateways, or wallets.
We’ve already seen many examples of neobanks integrating crypto services into their venue, including Revolut, N26, Money Lion, Volt, and Current.
Let’s see if it’s a justified move and what benefits neobanks can reap from the crypto market.
Why should neobanks consider integrating crypto?
- To attract new users and retain the existing ones
Nowadays, we’re seeing a huge surge of interest in crypto. This interest is led by major financial institutions coming to the sphere, such as BNY Mellon, CitiGroup, Deutsche Bank, Blackrock and many others.
And despite the current bear market, this interest only keeps growing. The crypto market’s current trading volume has reached $71.15 billion per day (on 14 Nov 2022). Imagine, In 2021, centralized exchanges recorded a trading volume of $14 trillion, jumping 689% from 2020’s $1.8 trillion.
Furthermore, there are firm signals that interest in crypto adoption will remain and increase, as 76% of financial institutions say they will definitely use crypto in the next three years. This trend will also be supported by the continuing development of crypto regulatory frameworks.
So, it’s safe to say that integrating crypto will attract new segments of customers for a neobank. Also, for the existing users that can have an interest in crypto but find it too complicated to manage between several services, it will be a huge plus to have all services gathered seamlessly in one known app with a user-friendly interface.
For example, 20% of Paypal users have traded cryptocurrencies on the Paypal platform. Since the crypto trading platform launched, Paypal reported users logged in twice as much into their app!
- To add a big selling point
Cryptocurrencies have similar values with neobanks. They both are branding themselves as the future of banking, striving for democratizing finance, and having a user-centric approach. So, it would be natural for a neobank to include cryptocurrencies in its positioning. It could be argued that cryptocurrency integration will soon be a must-have feature for a neobank.
- To create new revenue streams
Many neobanks gain popularity and loyalty by prioritizing users’ desires and having more beneficial conditions for users than traditional financial institutions. As a result, neobanks may struggle to make a substantial profit.
On the other hand, crypto can open up new revenue opportunities. The company can either add crypto trading into a premium package, earn on interest rates or spreads between buying and selling or do both.
This revenue line, combined with the fact that users and their resources no longer leave the app for third-party exchanges, gateways, and wallets, can make a substantial change to overall revenue.
- To develop a crypto banking infrastructure
The next major step in the evolution of neobanks is to become an all-in-one service, uniting crypto banking and traditional financial services in one “super app”. Such an ecosystem can include many services under one roof: KYC and AML procedures, on/off-ramp service, traditional deposits and loans, crypto wallet, trading platform, and card issuing and processing. Thus, such a crypto-financial ecosystem would combine the advantages of both traditional and new banking systems with a user-friendly and safe experience.
How Scalable helps neobanks enter crypto
During the decade of our experience we developed and perfected these turnkey digital assets trading solutions that help neobanks enter the crypto market as fast as possible and get exposure to the 55 million crypto audience.
White-label exchange platform
Modular exchange technology with our centralized exchange platform. In just 12 weeks you can launch a full-fledged deep liquidity exchange with Spot and Margin Trading, Perpetual Futures Contracts and over 3000 trading pairs. Among features: customizable trading terminal, integration with TradingView, trading competitions, reward hub and an extended list of advanced order types, including complex OCO and OTOCO orders.
Connection to liquidity
No need for expensive remarketing operations, manual rebalancing and settlements; with Scalable you get seamless and automated access to 15% global Spot liquidity with 0.01-0.02 spread on top pairs.
Utilize the Scalable’s robust APIs as building blocks to integrate digital assets operations into your venue. Enable your company to accept digital assets, implement fiat on/off-ramps, run custodial operations and much more.
White-label custodial and non-custodial wallets
Depending on whether your company wants to hold custody over your users’ funds and secure the private keys, we offer custodial and non-custodial white-label wallets. Beginners and professionals can benefit from a seamless trading experience, enabling them to buy, sell, send, receive and swap over 600 digital assets.
Unstable economic conditions create new opportunities for neobanks that want to develop and adapt modern fintech trends. If your company wants to compete with the growing crypto exchanges and doesn’t want to lose its crypto-curious target audience, get in touch with our team to learn more about our products.