Mission in a Twist
“Mission in a Twist”– a cartoon that illustrates the dangers local banks face by chasing new exotic Fintech products.
With the rise of new entrant banks (+58 neobanks in the US alone), many of the incumbent financial institutions have turned to new banking-as-a-service partners to expand their product range.
Some community banks and credit unions have decided to add crypto trading as part of their product expansion, attracted to the high fees and opportunity to add new millennials to their list of customers.
However, crypto trading is extremely volatile, … Bitcoin has suffered a significant fall from its all-time high set in November, losing more than $30,000. A $1,000 investment made at the peak would be worth just $556 today.
This is at odds with the missions of most community banks or credit unions that were started to provide credit for local businesses and consistent, typically low-risk, returns for their retail customers.
Rather than chasing new exotic products, these institutions should focus on making their existing products digital-first and using banking-as-a-service to reduce the costs of their backend systems.
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