Tech Time: Crypto Holds the Key to Credit Unions’ Future

The world of finance is undergoing a seismic shift, driven in no small part by the emergence of crypto assets as an investment class. Against this backdrop, credit unions, typically considered amongst the most trusted traditional financial institutions and once the backbone of American towns across the country, have reached a critical point.

In the past, credit unions and regional banks (we’ll call them TradFi) could rely on their members’ or customers’ children to bank with them by default. Today this no longer rings true, as less than half of Gen Z and millennials used the same financial institutions as their parents in 2021. For many people in this group, crypto trading tops the list of digital financial capabilities they want, with 64% of millennials having invested in cryptocurrency.

For credit unions to successfully onboard young and crypto-savvy members, they must use effective design and guarantee that app integration is seamless but adheres to strict regulation. All of this must be delivered, of course, while ensuring trust and safety.

Trust and Safety Are Paramount

News of high volatility, hacks, scams and lack of regulation in the DeFi (decentralized finance) sector can make potential investors wary, so players within the cryptosphere have had to adapt quickly to gain and retain the trust of customers.

This is notably different from how people view their credit union. Members are generally comfortable with face-to-face interactions or a typical digital banking interface and feel confident their money is protected. Conversely, a Morning Consult study shows only 5% of U.S. adults trust crypto “a lot.” But despite this lack of trust, according to Insider Intelligence, 21% of people in the US now hold cryptocurrency.

So how can TradFi expand offerings to meet the growing demand for cryptocurrency trading while also retaining trust? The most efficient way is to partner with a platform that has a proven track record of delivering a secure and transparent crypto trading environment.

Due to crypto’s round-the-clock nature, crypto platforms have developed some of the most rigorous standards of online security ever seen in finance.

For many crypto firms, security is like an onion. When you peel back one layer, you find another. For the security of each account, there are multiple layers of protection, so that if one layer were to be breached, the account’s integrity would remain intact.

By choosing the right partner, CUs can meet the growing demand for crypto trading—especially from younger demographics—while ensuring they retain the trust they have spent generations building.

Seamless but Rigorous: KYC and AML for CUs Entering the Cryptosphere

In today’s hyper-regulated financial services industry, every credit union knows that high standards of AML (anti-money laundering) and KYC (know your customer) compliance is critical to survival. But the compliance processes and systems are often complex, time consuming and labor-intensive, so when it comes to expanding service offerings to innovative new products and markets, TradFi organizations must ensure the lowest possible barriers to entry while also meeting the necessary standards.

So, what if a CU could partner with a trusted crypto platform, immediately giving their already onboarded and verified members immediate access to the world of digital assets? By working with an innovative crypto platform that can make its offering look and feel native to the CU’s existing digital banking offering, the whole experience can feel seamless and intuitive to the end user—whether seasoned or novice.

Not all crypto platforms are created equal, and CUs need to ensure that once their members start trading in this new environment, they are protected to the same standards as they would be when engaging in traditional finance processes.

Driving Crypto Adoption Through Design

Anyone who is just entering the crypto space can be confused and potentially put off by the seemingly endless amount of jargon that comes with it. The same barrier also applies to the look, feel and design of crypto platforms, which can feel unfamiliar to those less savvy with the digital world.

Contrarily, many millennials and Gen Zs that have grown up with apps and digital platforms don’t like the old-fashioned look and feel of some traditional banking interfaces. With 44% of millennials and 39% of Gen Zers now using P2P apps like PayPal, usage of finance applications continues to trend upwards. Clearly younger people have a preference towards more modern user interfaces for the financial services they use, and they’ll likely shy away from using clunky, outdated applications.

Therefore, CUs looking to enter the world of crypto face a unique issue. They must onboard new users that are interested in crypto and used to the interfaces of modern apps, whilst also providing education and reassurance to those existing members that are perhaps intimidated by the digital asset space.

The cryptosphere is a world apart from the “corporate banking blue” look of yesteryear. The applications within the crypto space reflect the modern nature of the industry. Younger generations have become used to having access to a wide array of choices of financial services and so tend to be pickier about which ones they choose. They want their financial service provider to offer a user interface that is both visually impressive and easy to use.

Conversely, it is vital that cryptocurrency applications provide ample “hand-holding” to those who are perhaps not used to the design and culture of the digital asset space. Not to do so would risk scaring these potential users away.

In today’s rapidly transforming financial services landscape, crypto holds the key to helping credit unions compete more effectively and remain a relevant, credible choice for younger, digital-savvy consumers. If you’re a CU looking to stand out from the crowd and attract a new generation of customers, now is the time to start bridging the gap between TradFi and DeFi.

Todd Crosland is founder/CEO of the next generation digital asset exchange, CoinZoom, which allows users to buy, sell, send and spend bitcoin, ether and over 40 top digital currencies. Crosland has assembled a world-class team that brings decades of financial trading and regulatory experience to the growing digital currency trading marketplace.