As we get deeper into the year, cryptocurrency has continued to demonstrate more and more mainstream growth and acceptance. And as such, traditional financial services have begun to take notice, evaluating ways in which they can manage the regulatory hurdles and consumer trends that could maybe give them an opening in the currently niche market.
As the data show, since the beginning of the year, the number of people who have not invested in cryptocurrency has continued to drop, while those who have invested have risen from nine percent to 17%.
While a significant portion of the Gen Pop still is unsure just what cryptocurrency is, concerns over its legitimacy and its volatility have flatlined or showed a significant decline since CivicScience first started tracking the data in April of this year.
Perhaps unsurprisingly, demographics of those who have invested in crypto, or intend to, tend to skew male and young. What is interesting, however, is that investors or intenders remain relatively even across income levels, and are much more likely not to own their own home (implying a level of risk-tolerance for financial investments is inherent in crypto investors).
So what does this mean for financial institutions who may want to find a way into the market?
The answer is tricky. The problem for mainstream financial institutions who may want to introduce their own cryptocurrency, or other type of blockchain offering, is that nearly a quarter of the Gen Pop (23%) is interested in crypto as a workaround from both government involvement and adverse economic conditions (such as recessions or regulatory oversight).
A large financial institution creating its own cryptocurrency would likely have to develop a tech that was inherently closer tied to both a government and the movements of economic cycles.
But this more-regulated crypto may not necessarily be a bad thing. As data show, those aged 55 and older (the demographic least likely to have invested or intend to invest in crypto) are vastly more interested in the tech as a short term growth opportunity, than for its more technical benefits, such as fast transactions or independence from government influence that other ages skew towards.
Surprisingly, the youngest age groups also see crypto as a great opportunity for a long-term growth investment, indicating a lack of concern over its highly volatile nature. So, while older investors essentially want crypto to be a kind of stock asset (and perhaps perceive it that way), younger investors want to make a small investment into a fortune over time. Both of these demands could be well met with a large financial institution’s potential blockchain offering.
Another good sign for financial institutions looking to get into the crypto world: most of the Gen Pop wants a traditional bank to back the technology.
Although, that desire has dropped by 12 percentage points since April, with PayPal gradually growing in popularity.
Interestingly, one other aspect about banks getting into crypto is a previously unconsidered population segment: the unbanked.
While met with some controversy, crypto and other FinTech strategies might make it possible for the unbanked to gain access to more financial instruments. Over the last four months, the Gen Pop has been showing more positivity to the potential of the idea.
And breaking the data down by age and income, we see that the younger and the less-wealthy are even more optimistic about the potential for crypto to change the structure of the financial services industry.
In other words, cryptocurrencies definitely do have a place among traditional financial institutions and banks, so long as it is developed the right way and served to the customers most likely to want to use it, such as older consumers looking for a short term investment without all the barriers that crypto investing currently has, and the unbanked, who may be looking for a way to access financial instruments without as many barriers that the financial industry currently has.
CivicScience will continue to regularly track consumer attitudes towards cryptocurrency as the tech, and related FinTech, continue to become more mainstream.