Credit unions are known for providing individualized attention and innovative goods and services to their members. They strive to help their members achieve their financial goals and interests. Some credit unions are beginning to offer members secured access to cryptocurrencies to meet their customer’s needs. Although the National Credit Union Administration (NCUA) currently prohibits credit unions from keeping digital assets in-house, they are permitted to offer this service through partnerships with third-party providers. Cryptocurrency is quickly transforming from solely an investment opportunity to a means of exchange, and it is important for credit unions to assess the benefits offering cryptocurrency services could provide to their current and future members.
Adoption of a cryptocurrency offering of some kind has been on the rise for financial institutions. Cornerstone Advisors' 2022 “What's Going on in Banking” report reveals that 1 in 10 financial institutions plans to introduce cryptocurrency investing/trading services in 2022 and another 13% plan to launch the service in 2023. The study concludes that the demand, supply, and pressure of the current times is a sign for financial institutions to adopt cryptocurrency into their new product offerings.
The desire for the service is high, especially amongst tech-savvy millennials and Gen Z populations. According to a study by Fiserv, 61% of Gen Z and Millennials want their bank or credit union to hold their cryptocurrency assets. Furthermore, this study detailed that 69% of those that have bought or sold crypto utilized a non-banking app or website. Many young crypto investors are forced to use third-party investment apps such as Coinbase and Crypto.com, which draws users away from their traditional banking services - even more so as these third-party services add traditional banking features like debit cards and savings accounts. There is a clear need to house crypto assets through trusted financial institutions, like credit unions.
The lack of knowledge about cryptocurrency is widespread, influencing hesitation of adoption. 51% of CU executives said that their reluctance to adoption is due to lack of personal/member knowledge of cryptocurrency. This is just a bit less of a deterrent than the volatility of the market, which 56% of CU executives cite as their reason not to offer cryptocurrency in their digital offerings. Thus, education has to be a major component of a credit union's digital asset strategy.
It’s time to offer members greater financial alternatives and authority. Members desire a credit union that offers cryptocurrency services while also empowering them to make their own decisions. There are risks to ignoring cryptocurrency as members continue to withdraw to third-party exchanges. The time is now for forward-thinking credit unions to capitalize on digital assets with an appropriate strategy and product roadmap.
Sources
What’s Going On In Banking 2022, Cornerstone Advisors
Fintech Adoption, Novemeber 2021 Report, Fiserv
Credit Union Innovation, September 2022, PYMNTS
