Despite widespread skepticism, more and more retail banks are offering cryptocurrencies as a fully-fledged asset class. While some banks are specifically building up their own expertise in blockchain, most are relying on third-party providers. These are the findings of a new study by Lucerne University of Applied Sciences and Arts.
After record highs in 2021 and a subsequent slump, the prices of cryptocurrencies have risen significantly again in recent months. Various retail banks have decided to build up a range of cryptocurrencies. According to a study by Lucerne University of Applied Sciences and Arts (HSLU), 28% of retail banks offer cryptocurrencies as a fully-fledged asset class or intend to do so in the future. After years of reticence, it looks like at least larger retail banks are recognizing a need for cryptocurrencies among their customer base.
Banks are considered more trustworthy
"Banks seem to see potential in crypto assets," says co-author of the study Dr. Felix Buschor. The financial expert attributes this to two major advantages that banks have over crypto exchanges: "Firstly, they enjoy the trust of their customers when it comes to the secure processing and safekeeping of cryptocurrencies. Secondly, cryptocurrencies can be merged with existing banking services in a customer-friendly way." According to the head of the study, this means that cryptocurrencies can be traded in e-banking or mobile banking or are shown together with other assets in the custody account statement and tax register.
Blockchain: a game changer for banks?
For banks, the introduction of cryptocurrencies is not just a mere expansion of their product range. According to Buschor, this inevitably raises the question of what strategic importance they attach to blockchain for the future of the banking business. As the study shows, there are different views on this: "Some banks see blockchain as a technology that will form the backbone of banking in the future. Mastering blockchain technology is seen as a core competence," says Buschor. However, the majority of banks are less sure about this. For them, the focus is on being able to react quickly to customer demand for cryptocurrencies.
These differing views are reflected in sourcing: those who see a lot of potential in crypto assets are now investing substantially to build up internal bank expertise, systems and processes relating to blockchain. Banks that currently see crypto assets as more of a short-term business case would buy this expertise from third-party providers. "This is much quicker than setting up their own processes," says the co-author of the study.
Bank IT and sourcing study 2024
The Bank IT and Sourcing study by the Institute of Financial Services Zug IFZ highlights current and future developments in outsourcing at retail banks. This year’s sourcing study is once again based on a broad understanding of sourcing as any form of cross-company collaboration. The study therefore not only covers topics such as the outsourcing of back-office activities or the external procurement of IT services, but also deals with current issues. Among other things, this year’s study looks at how retail banks provide cryptocurrencies to their customers.
Blockchain Zug - Joint Research Initiative
In order to gain an even better understanding of the effects of blockchain on the banking sector, the Lucerne University of Applied Sciences and Arts is stepping up its research activities in a joint project with the University of Lucerne. The ’Blockchain Zug - Joint Research Initiative’ is being supported by the Canton of Zug with almost CHF 40 million. Find out more at hslu.ch/blockchain
