Even to fervent followers of the burgeoning cryptocurrency market, it may not have been immediately clear what Customers Bank’s addition of crypto clients means for account holders and consumers.
And the reality is the news may not mean a great deal just yet — but the West Reading-based financial institution’s calculated foray into the crypto world does have some potential long-term implications for everyday banking.
“The crypto story is really exciting, and one we don’t shy away from,” said Christopher Smalley, managing director of digital banking for Customers Bank in a one-on-one interview.
“But for customers outside the crypto industry, this has a use case beyond crypto.“
Last week, Customers Bank announced a lineup of major cryptocurrency clients — some of the world’s largest corporate bodies in crypto exchanges — that will be using its branded CBIT token and a real-time payments partner platform, TassatPay, as an “on and off ramp” for crypto transactions.
Smalley acknowledged that if you aren’t one of those firms, then the announcement itself probably isn’t all that consequential.
The belief at Customers Bank, however, is there’s a potential to continue shaping the future of finance through its enhanced position in crypto.
“That’s not to say there’s no consumer element to this move,” Smalley said.
Updating antiquated payment systems
What often gets lost in all the hubbub surrounding the rise and fall of the prices of various cryptocurrencies of the moment is the technology it’s based on — blockchain.
Blockchain transactions have several advantages over the current and more traditionally used ACH payment system, such as being instantaneous and more secure.
“What we know is the puck is going toward real-time payments,” Smalley said.
“These things (transaction processing systems) have not evolved in 50 years and there’s only a handful of businesses that have built an effective real-time payments platform. There are very few that can handle this type of volume, and only one other using blockchain.”
Smalley said to imagine a tenant being able to transfer a rent payment at the precise last minute it’s due, or in business, for a manufacturer to be able transfer payment the moment raw materials become available.
Using blockchain, large transactions will be able to be settled instantly, he said.
Being the right amount ahead of the curve
Wading into cryptocurrency is also very on brand for Customers Bank these days, as it has not merely embraced, but become an innovator in the world financial technology, or fintech.
“We are constantly evolving to bring the bank to where the puck is going,” Smalley said. “We’re focusing on the future needs of customers with leading-class solutions.”
But that doesn’t necessarily mean rushing into things, either.
Smalley noted Customers Bank is working hard both in lockstep with regulators as well as its own teams being careful to ensure that any products that are offered to customers are practical and safe.
“In terms of where are we going, it’s very much crawl, walk, run in a new vertical — particularly when it’s evolving on its own so rapidly,” he said, adding that, over time, they’ll likely find “very narrow ways of what consumer in the crypto space looks like.”
“The last thing we want is to roll out a product suite to customers that is confusing or enables them to participate in markets we don’t fully understand and they don’t fully understand.”
Customers Bank’s headquarters in West Reading.
Raises Customers Bank’s standing
The bottom line is being involved in crypto is good for Customer Bank’s bottom line and that of its parent company, publicly traded Customers Bancorp and its shareholders. The institution has made it a point to insert itself into different financial markets and be a disruptor
“Customers Bank has over the last several years been very thoughtful about finding niche verticals that a bank of our size and agility would be able to enter the market quickly and aggressively, grab market shares and drive shareholder value up,” Smalley said.
“We’ve done this with our warehouse lending mortgage business, consumer fintechs, PPP loans, fund finance. I think that the crypto vertical in a sense is just another one of those that we see not enough banks doing and we can pretty quickly gain market share.”
Smalley noted that, with the move, Customers Bank becomes just the third bank to offer an instantaneous platform to settle trades in real-time, creating a big business opportunity.
“It’s a trillion-dollar market that does not have enough bank partnerships, so it was kind of a no-brainer for us,” he said.
Cryptocurrency isn’t going away
Despite seemingly betting big on crypto, Customers Bank actually stresses it has no position on the market itself and is not advocating any particular stance.
“This is not any statement on our opinion on crypto’s long-term storage of value,” Smalley said. “We have no opinion on that or one we want to project to customers.”
That being said, crypto is being traded in large quantities around the globe, and Customers Bank isn’t about to pretend that it’s not.
“In terms of what customers should take away from our position in crypto is it’s too big to ignore at this point,” Smalley said. “This market is colossal.
“There are very large institutional businesses working with hedge funds working to invest in crypto, and we would be remiss for not banking those customers.”
Source: Berkshire mont
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