Dive Brief:

• Fiserv, the payments processing giant, is enabling its bank clients to offer their customers Bitcoin services, according to a June 23 press release issued by the company. Fiserv will partner with the New York Digital Investment Group (NYDIG) to offer the custodial services for the digital assets.

• With the integration of the two companies's services, banks and credit unions of all sizes will be able to facilitate their customers' buying, selling and holding of bitcoin as demand for cryptocurrency services rises among U.S. consumers. Nearly 46 million or 22% of the adult population in the U.S. owns bitcoin and that number is expected to grow in coming years, according to a January survey conducted by NYDIG.

• Fiserv and NYDIG are working with Irvine, California-based First Foundation Bank to bring the new service to market. “If our industry is truly committed to innovation and the financial future of our clients, we need to lead in this area and help create a secure and trusted platform for using bitcoin for everyday financial matters," said First Foundation CEO Scott F. Kavanaugh.

Dive Insight:

With the new Fiserv-NYDIG service, financial institutions can offer their customers the option to buy, sell and hold bitcoin through online and mobile bank portals, according to the press release. In the future, they may also enable banks to offer their customers a bitcoin-based rewards program.

Customer adoption of digital assets has been increasing despite them being highly volatile. With the backing of major financial institutions, digital assets like bitcoin could gain more acceptance among consumers who would be able to explore digital asset uses.

“Interest in cryptocurrency, and particularly bitcoin, has skyrocketed over the past several years, to the point that bitcoin investing is now a commonplace activity,” Fiserv Chief Digital and Data Officer Byron Vielehr said in the press release. “People continue to turn to financial institutions as a central place to manage their financial activity, and being able to offer this capability will help position banks and credit unions at the forefront of their customers’ financial lives.”

While customer adoption of bitcoin has increased over time with little help from financial institutions, “banks can play an even more critical role in the evolution of Bitcoin by making it accessible in novel ways,” the NYDIG report stated. Bitcoin is the most popular cryptocurrency, but there are hundreds of different types.

Last month, NYDIG partnered with another payments processor, Fidelity National Information Services (FIS), also to allow financial institutions to offer bitcoin services to their customers. As part of that new tie, FIS invested an undisclosed amount in NYDIG through its investment arm, FIS Ventures.

NYDIG found that 81% of the consumers would move their bitcoin holdings to their current bank if it had a secure bitcoin storage option, according to the survey of 2,184 U.S. consumers in January 2021. Also, 71% of the surveyed consumers said that they would switch their primary bank account to a bank that offers bitcoin trading and storing services while 81% would be interested in buying bitcoin if their banks offered it. 

“We think it is safe to say that the Bitcoin ‘train’ has left the station. But the passengers want banks–their trusted financial providers–to get them on board,” the NYDIG report stated. “The data shows that not only would consumers feel more comfortable buying and holding their Bitcoin with a bank, but that they desire bigger and bolder opportunities.”

As of April JPMorgan Chase, the biggest bank in the U.S., was reportedly preparing to offer a bitcoin investment fund that would let clients invest in the digital asset, with NYDIG serving as the bank's digital asset custodian. Citibank was also reportedly considering offering cryptocurrency services to its clients, according to a news report last month.