Cryptocurrency custodian NYDIG has partnered with banking technology vendor FIS to enable the latter’s clients to offer Bitcoin trading, and hundreds of smaller US retail banks are already planning to take advantage, per CNBC. The full rollout to customers is expected in the coming months, and bigger banks may join later. Banks want to offer Bitcoin trading in order to stanch the flow of their customers’ funds to crypto exchanges such as Coinbase, NYDIG President Yan Zhao told CNBC. NYDIG also plans to support Bitcoin payments generated by traditional banking features, such as deposit interest and card rewards points.
By offering crypto trading, participating banks are following in the footsteps of challenger banking players such as Revolut and Venmo.
The Bitcoin trading partnerships will help to level the playing field between small incumbent banks and challengers and introduce a new revenue source for participating banks. By teaming up with FIS and NYDIG, US retail banks can erase an emerging competitive advantage that challengers like Revolut and Venmo have with their crypto offerings. The retail banks’ upcoming offering gives them the opportunity to retain customers by pitching the convenience of keeping deposits and trading under one roof, potentially helping limit the outward flow of deposits to challengers or crypto exchanges. Crypto trading also gives retail banks a chance to diversify their revenue mixes with trading fees: An FIS executive told CNBC that partnering banks will decide how much to charge and keep most of the proceeds.