Think you understand cryptocurrency? More important, do you understand what it means to your community financial institution? Probably not as well as this episode’s guest, Lou Grilli, Sr. Innovation Specialist at PSCU. Host Josh DeTar dug deep as Grilli explained crypto and shared how it will revolutionize financial services.
⚡ We can be enthusiasts and visionaries, but we can’t predict the future. When people predict the future, they tend to think big. We were supposed to have flying cars by now. Instead we can conduct banking transactions from anywhere and order a pizza without picking up the phone. ‘When we were in the early days of the internet, there was this horizon, and most people could not see over the horizon,” said Grilli. “We had no idea how far out that horizon was. And what are we talking about — like 1993-ish? There was no way back then to predict that there would be a pandemic, and my credit union branch would close, and they would tell me to use online banking. A lot of the people who were later talking about online banking were arguing, ‘There’s no reason for online banking; just come into a branch … We didn’t know about Amazon back then, and there was absolutely nobody who could predict back then that elections in the U.S. would be influenced by online social media.”
⚡ Community FIs should not close their eyes to crypto’s opportunities. Is cryptocurrency a threat or an enabler for community financial institutions? That depends on how your FI approaches it. ”Let’s say I’m looking for the best mortgage rate. And, of course, the best mortgage rate is with a community bank or credit union. But I don’t have enough funds for the down payment. I have some Bitcoin, Dogecoin, and other things I purchased several years ago. Now I have like $30,000 worth of cryptocurrency … Can I put this up as collateral for the loan? Well, no,” noted Grilli. “No regular financial institution can take that as collateral. It’s too risky for FDIC and NCUA insurance, understandably. But third parties are willing to step up and act as the custodian and lock up or stake collateral on behalf of the financial institution. And they’re getting ready to open this up as a commercial service so that financial institutions can accept collateral, but it’s not on their books.”
⚡ We recognize three groups: crypto enthusiasts, crypto curious, and crypto skeptics. Some believe crypto is here to stay. Others believe it’s a passing fad. And in the middle is the “wait and see” crowd. “ I see these stats … one in five U.S. adults had purchased crypto by the end of 2021. And at least half of them had done that within the calendar year of 2021,” said Grilli. “However, there’s this other market demographic called crypto curious. These people would like to get involved if it’s simple and if there’s an intuitive way to do it. There’s some risk involved, but if there were an easier way to dabble in it, they would.”