As the US registers two consecutive quarters of negative growth and the energy crisis in Europe fuels fears of impending recession, the global economic outlook is uncertain at best. Risk assets like equities have taken a hit as nervous investors seek safety in haven assets such as cash. Yet with inflation at its highest in 40 years, cash and cash equivalents are a poor store of value. Against the backdrop of this tumultuous investment landscape, digital assets have held up fairly well and continue to command interest as an alternative asset class.
Despite the volatile prices, the Bitcoin hash rate is still hitting all-time highs, underscoring the strength of the network, and many experts still predict a $100,000 BTC price by the end of 2022, despite the incessant macro headwinds. With improved regulation of cryptocurrencies in the EU providing a clearer framework for regulated participants and large economies like India choosing to regulate cryptocurrency rather than ban it, the direction of travel is clear: digital assets are here to stay. Fintechs and neobanks who aren’t offering them to their customers can bet their competition is.
Here are some of the compelling advantages to offering digital assets:
Giving customers what they want
Global adoption of cryptocurrencies jumped by 880% in 2021 with some reports expecting to see the number of global crypto owners reach 1 billion by the end of 2022. In today’s high-inflation environment, investors are increasingly seeking to diversify their portfolios across asset classes. Risk or not, that extends to digital assets.
Traditional institutions like JPMorgan now allow wealth clients to access Bitcoin, and the world’s biggest online payment system, PayPal, allows customers to use their crypto holdings at its 26+ million global merchants. Marketing 101 states the importance of identifying customers’ wants and needs in order to deliver them. It’s clear that retail investors are demanding these services, so providing them should be paramount.
With Elwood’s unique infrastructure, integrating digital assets within companies’ existing tech stacks has never been easier. We help fintechs and neobanks cut through the cumbersome crypto infrastructure, and overcome issues such as fragmented liquidity and frequent downtime by offering one unified API, with deep liquidity and best-in-breed connectivity, helping them grow their businesses.
Igniting your profitability
Crypto assets have been one of the most effective products to increase profitability and user engagement for fintechs and neobanks. Early players Square stated in a 2021 report filed with the US SEC, “Bitcoin has helped increase gross profit per active customer and engagement in our broader ecosystem as bitcoin actives use other products, such as Cash Card and direct deposit, more frequently compared to the average Cash App customer”.
We’re still at the beginning of crypto adoption by neobanks and fintechs and, by implementing this technology early, firms can give themselves an edge over their competition. With Elwood, companies can own the customer experience through their existing interfaces while we take care of the underlying crypto connectivity.
Appealing to a new generation of customers
The next generation of investors is digital-native and comfortable interacting online. Many investors from young millennials to Gen-Z are increasingly crypto-savvy. From well-established networks like Bitcoin and Ethereum to up-and-coming sectors like meme coins, DeFi, and NFTs, the youngsters are bullish on digital assets.
According to a survey by CNBC, almost half of all millennial millionaires have over 25% of their wealth in digital assets and 50% of them own NFTs. When neobanks offer crypto investments, they capture the attention of this wealthy segment of potential clients and stand out in an increasingly saturated market. Elwood underpins hundreds of thousands of transactions in cryptocurrencies, helping neobanks and fintechs give their customers greater choice and connectivity.
Improving customer retention
In addition to tapping into the potential of next-gen investors, neobanks and fintechs are more likely to retain their existing client bases, as they won’t have to go elsewhere for their crypto investments or leave the banks’ ecosystems to download additional apps. They have the convenience of doing everything inside one platform.
After adding a selection of digital assets for its customers, PayPal users are now engaging a lot more with its product, logging in twice as much to the app. Moreover, users can now move their digital assets to external wallets, with PayPal executive Jose Fernandez da Ponte affirming the popular global fintech is “in this for the long term”.
Future-proofing your brand
Cryptocurrencies are here to stay and demand will continue to rise. If neobanks and fintechs aren’t giving their clients access to digital assets, they’re failing to future-proof their brands. Cloud-native and leveraging a single API connection across the crypto market, we are uniquely positioned at the centre of the digital assets space. Partnering with Elwood allows you to provide a seamless customer experience that helps add additional revenue streams, attract new clients, and secure the longevity of your brand.