Third-Largest Bank in the US Explores Consumer Crypto Products
Citibank, the third largest bank in the US by assets, is looking into consumer crypto products. Citigroup, the parent company of Citibank, issued an extensive report in April outlining the future of the digital economy. The report, entitled “Bank of the Future: The ABCs of Digital Disruption in Finance,” noted that banks will need “senior leadership teams to be focused on digital transformation” in order to survive.
Cheddar reports that a contact at Citi says the bank “has moved beyond thinking about crypto ‘in an abstract way’ to consider how it could package a consumer product.”
Traditional financial services institutions and leading banks have been deeply divided on whether the industry should make a pivot into crypto-related offerings. Bitcoin’s volatility, the lack of clarity around regulations, concerns about money laundering and other criminal activities that are facilitated by peer-to-peer digital currencies, and the chance, however slight, that crypto could be the kryptonite that kills the banks has generated everything from reluctance to skepticism to condemnation of cryptocurrencies.
Citi’s “Head of Consumer Crypto Asset Innovation” removed that particular title from her LinkedIn page, reports Cheddar.
Keeping crypto projects and initiatives under wraps remains a key strategy for big banks that are trying to figure out how to remain innovative and steer clear of becoming the Blockbuster Video of Finance – without destroying their business model or abandoning core legacy products, systems and protocols.
Banks that are on the sidelines of the revolutionary tech are also weighing how to continue to characterize Bitcoin as bad while their competitors are moving into the sector and creating legitimacy around digital assets. They are also hearing cues from the federal government. On Wednesday the US Treasury Department released a report stating crypto is “poised to impact innovation in financial services.”
BlackRock CEO Larry Fink recently denied reports that the asset management firm, which has $6.3 trillion in assets, is exploring crypto-related services. But Citigroup’s 128-page report, which lists several use cases for smart contracts, states the benefits of Ripple, and confirms that it’s the banks and not Bitcoin that are at risk of losing steam, put their focus in black and white.
While Citi has yet to confirm any consumer crypto products, Citigroup has already signed on for IBM’s trial blockchain project with CLS, a foreign exchange settlement provider that handles $5 trillion a day.