If you’re having a hard time getting your head around how your community bank can benefit from digital assets, you’re not alone. Most of us are trying to identify how digital assets will support our customers and bottom lines.
That’s partly because we’re talking about a fundamental shift in how our ledger system operates. Today, the banking system focuses on a centralized ledger where the bank controls the record and decides what gets recorded and when, and where customers rely on you to make sure it happens. Contrast that with blockchain, a distributed ledger with no single authority, no required intermediaries and a different model.
Fortunately, that new model does align with your existing infrastructure: Wallets and keys map to online and mobile banking, digital assets map to account balances, and blockchain maps to your core. So, the technology is new but the concepts are not, and that breeds opportunity. Cross-border commercial payments, shift and daily payroll, escrow and conditional payments, and programmatic idle cash management all provide important use cases for consideration.
While it’s OK to still be getting your bearings, your community bank also needs to act in parallel. Specifically, take these three steps:
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Stay educated. This is not a one-and-done, you-learn-it-and-it’s-over scenario. With legislative and regulatory developments, the financial infrastructure landscape changes daily. You and your team need to stay up to speed on what that means for your bank.
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Extend that knowledge to your full team. It’s not going to be enough to have one in-house digital assets knowledge source. You have to level up your organization to address this new environment. Your board needs to understand the implications. Your executive team needs to see the possibilities and pitfalls. Your frontline staff needs to know what to do when asked.
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Put a stake in the ground and set definitive milestones. You need a digital asset strategy, but it’s not about setting lofty future goals. You must take tangible actions now. Maybe it’s saying, “I’m going to be fully fluent on digital assets by X date.” Or maybe it’s “I’m going to have a test use case in the market by the end of the year.” Whatever that looks like for your institution, you must move with intentionality. There’s real infrastructure work at play.
The good news is you’re not in this alone. ICBA offers a wealth of resources, including timely updates via NewsWatch Today, and provides educational vehicles like the Digital Assets Webinar Series (icba.org/webinars) to help your team gain the foundational knowledge to begin investigating the opportunities and charting your community bank’s path forward.
Remember your charge as an agent of change, and act now so you don’t fall behind in this rapidly changing environment.