In recent years, cryptocurrencies have shifted from being seen as a fringe technology to becoming a key focus for traditional banking institutions. To explore this fascinating evolution, Richard Bostock, Head of Partnerships at C-Innovation, sat down with Anna Basangova, a seasoned FinTech professional with over 15 years of experience in investment banking, to discuss how banks are approaching cryptocurrency. Their conversation sheds light on the challenges, opportunities, and the future of banking in a rapidly digitizing world.
A changing landscape: the rise of cryptocurrency in banking
According to Anna, banks’ attitudes toward cryptocurrency have undergone a remarkable transformation. While skepticism and concerns over regulation dominated the early days, the last few years have seen increasing regulatory clarity and growing market demand. “The initial reaction from banks was to perceive cryptocurrencies as a threat,” Anna noted. “Today, however, banks recognize the potential of cryptocurrencies and blockchain to complement their existing infrastructure.”
Despite this progress, the industry remains in its early stages. Banks are exploring ways to integrate cryptocurrencies, balancing innovation with the need to ensure robust regulatory compliance and security.
Blockchain’s crucial role
At the heart of this shift lies blockchain, the technology underpinning cryptocurrencies. Anna emphasized that many banks have started experimenting with blockchain through proof-of-concept projects and initiatives like smart contracts. These technologies aim to streamline processes by removing intermediaries, reducing fees, and improving functions like custody and reconciliations.
“Blockchain has evolved from a buzzword into a practical tool for transforming transactional banking, asset management, and even digital identity systems,” she explained.
Managing risks: a balancing act
Integrating cryptocurrency isn’t without its challenges. Banks are particularly focused on managing risks related to volatility, security, and investor protection. To address these, many institutions have introduced robust cybersecurity protocols and tailored educational resources for both customers and employees.
“Risk management isn’t just about protecting the bank,” Anna pointed out. “It’s also about building trust with customers who are navigating this new financial landscape.”
Meeting customer demand with tailored offerings
Customer expectations are reshaping how banks approach cryptocurrency. While demand for seamless integration of crypto and traditional assets grows, many banks still lag behind in delivering user-friendly interfaces and modernized custody models.
“Banks face a key decision: build or buy. They can develop their own solutions or partner with specialized firms to bring value-added services to market faster,” Anna explained. “Features like reporting and auditing capabilities are becoming essential for gaining customer trust.”
Staying competitive in an innovative sector
Offering cryptocurrency isn’t just about staying ahead of the curve—it’s about survival. “Crypto will soon stop being seen as an innovation and become part of the norm,” Anna predicted. She pointed to the rapid adoption of central bank digital currencies (CBDCs) and stablecoins as indicators of this trend.
However, innovation isn’t the only pressure banks face. Openness, integration, and partnerships will be critical as they navigate this competitive landscape.
Navigating regulatory complexity
Regulatory reporting is another area where banks are adapting. Anna highlighted the challenges of calibrating processes with evolving standards. Organizations like ICMA (International Capital Market Association) are working to create standardized frameworks for crypto-related reporting.
“In the future, we might see a single ledger system that eliminates the need for back-office reporting altogether,” she suggested. “But for now, incremental solutions are the way forward.”
Challenges and lessons learned
Anna’s experience working with cryptocurrencies has been both challenging and rewarding. From convincing decision-makers to navigate unclear regulations, each step has required persistence and collaboration. She stressed the importance of building strong business cases and maintaining clear communication with regulators to ensure alignment.
“Education is a big part of this journey,” she added. “Banks and their customers need to understand the technology and its implications.”
The road ahead: 2025 and beyond
Looking ahead, Anna believes the combination of blockchain, generative AI, and quantum computing will reshape the financial landscape. “The road to widespread adoption isn’t straight, but crypto and its underlying technologies are here to stay,” she said.
For personal and SME banking, these changes could mean greater transparency, trust, and efficiency. However, the journey will require continued openness and collaboration across the industry.
C-Innovation Takeaway: Digital Banks and Cryptocurrency in 2025
As digital banks navigate the evolving landscape of cryptocurrency, embracing cryptocurrency is no longer optional—it’s a strategic necessity for staying relevant and competitive in 2025.
The integration of cryptocurrencies into banking models signals a pivotal shift from viewing crypto as a threat to recognizing its potential to enhance infrastructure, improve customer offerings, and streamline operations. However, success in this domain hinges on:
Proactive Risk Management: Banks must balance innovation with stringent security and regulatory compliance to foster trust.
Customer-Centric Innovation: Meeting growing demand for seamless integration of traditional and crypto assets is critical, particularly through tailored custody and reporting solutions.
Collaborative Ecosystems: Partnerships with fintech and blockchain specialists will enable banks to scale their crypto offerings efficiently while adapting to evolving regulations.
Looking forward, the convergence of blockchain, AI, and quantum computing is set to redefine the financial services landscape. Digital banks embracing this transformation will lead the charge in delivering transparent, efficient, and innovative services for personal and SME banking. At C-Innovation, we believe openness, trust, and collaboration are the cornerstones for the future of cryptocurrency in banking.
If you enjoyed these insights, be sure to check out the full podcast episode. Follow C-Innovation on LinkedIn and subscribe to our newsletter for more updates on the future of financial technology.
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