Developing a long term bridge between fiat and crypto means involving and getting the support of your banking partners. Furthermore, getting this right at the start of your business journey will help you avoid suspension of services or deboarding, optimise your revenue streams, and minimise your operational costs.
But, how do you align your own processes with the traditional, fiat-based payment systems’ gatekeepers? Read on.
The shift: overcoming the fear of the unknown
Previously, incumbent banks were hesitant to work with the crypto ecosystem, however, we’re now witnessing a shifting attitude and outlook with more banks looking to support the growth and development of crypto companies.
Banks’ initial hesitation about crypto was chiefly driven by a lack of transparency and fear of the unknown – crypto is the first real innovation in payments in 30 years. In addition, incumbent banks are highly regulated corporations, and responding quickly to change isn’t in their wheelhouse. But as crypto continues to develop, bankers’ profit motives finally overcome their initial fear of new, scary technology. Yet, one thing that won’t change is the high-level standard of due process banks will expect from companies they look to support in the crypto space. Banks have developed these standards through decades of experience, best practices and near misses.
Crypto to fiat is where things can get a little hairy
Crypto is great, but we must think about how it needs to work with fiat – a point that is currently often overlooked.
Although crypto adoption is accelerating, banks still want to ensure that crypto businesses follow specific workflows and processes. Furthermore, if you are building a crypto-focused start-up, your banking relationships are vital in ensuring future success. In fact, multiple factors will determine the strength and longevity of these relationships, including transaction workflows and how funds flow through the monetary system.
How can crypto start-ups overcome key blockers?
Our embedded banking technology acts as a piece of middleware that helps simplify the interaction between crypto and fiat by predefining core banking workflows. Our core workflows will satisfy the requirements of banking partners and help you optimise your revenue streams and minimise operational costs.
Here’s how we do that.
- Master account architecture
We offer a pre-built architecture that can support complicated house account structures and optimise operational efficiency. We can create separate Master Accounts for Operational Liquidity, Fee Collection, Client Money and many more. This smooths the reconciliation process of funds, but it also simplifies the preparation of financial accounts and assists you in following regulatory requirements where applicable.
- Unique customer accounts & balance reconciliation
Our platform makes it possible to create unique virtual accounts for each end customer. These virtual accounts can come with dedicated account details (account numbers, IBANs, etc.) while allowing customers’ deposits to be automatically allocated to their corresponding ledger.
Subsequently, you no longer have to rely on customers entering a unique reference and creating a deposit ticket to add funds to your platform. As a result, you reduce the time support teams have to deal with supporting customers who either forget to enter the reference or have mistyped it. Additionally, the sooner the funds are available for customers, the sooner they can interact with your application and the sooner you can recognise revenues.
- Connections to local payment networks
Connecting with us and subsequently with our partners means you will be able to receive customer funds via local payment networks. In the UK, this is Faster Payments, and in Europe, this can be SEPA and or SEPA Instant.
Having access to these networks allows for almost instantaneous receipts and sending of funds for both you and your customers, significantly improving user experience by eliminating stickiness and delays in using your platform.
- Compliance adherence and support tools
The Integrated Finance platform has been built with client money and safeguarding regulatory requirements in mind. So, depending on your licensing status (regulated vs unregulated), we can offer pre-configured workflows to satisfy both banking partners and regulators. We also provide a package of support tools to track changes in safeguarding liabilities and a sweeping tool to minimise the operational costs associated with safeguarding.
Three golden rules
- Building the correct workflows and processes at the start of your business journey will help you maintain confidence in your banking relationships
- Selecting an embedded finance provider who can act as your advisor, and offer you valuable insight, will save you both time and money
- Tackling areas of concern such as safeguarding and separation of client vs operational funds can simplify the interaction between your crypto business and banks
Talk to an Integrated Finance expert about your crypto fintech needs today.