Unlocking Access to Digital Values and Innovation - The Synpulse Crypto Roadmap for Banks

Financial institutions (Fis) are uniquely positioned to redefine client experience by integrating digital values into their offerings. From participating in trends such as the redefinition of digital art to diversifying client portfolios, they can enhance client engagement, retention, and innovation by integrating digital values into their offerings. By tapping into the decentralized economy, FIs can pioneer new financial products tailored to a rapidly evolving industry.

Our mission is to advise banks on how to enter and profit from the digital asset space. In order to do so, Synpulse has created a crypto roadmap for banks (fig. 1) to help educate and navigate them. With this series of articles, we will go step by step into the individual areas of the roadmap by looking into five different use cases following our strategic approach for banks:

1. Strategical approach for banks (Introduction)
2. Buy / Sell and custody of crypto assets
3. Staking
4. Lending
5. Tokenisation of non-bankable assets
6. Digital values and NFTs

In this sixth and last article we are focusing on Digital values and NFTs.

As the digital economy evolves, investor interest in digital values, usually represented as NFTs, has expanded from digital art collections to a wide range of financial assets. Sophisticated bank clients are either already holding NFTs or looking to diversify their portfolios by exploring this emerging area. Beyond their cultural and community-driven appeal, NFTs present opportunities within alternative investments for retail and high-net-worth clients.

The demand for digital values is fueled by enthusiasm for innovation and concerns about secure custody, a critical consideration for investors. FIs, with their expertise in safeguarding valuable assets, are ideally positioned to provide the secure custody solutions clients demand. By addressing these needs, institutions can play a pivotal role in unlocking NFTs' potential as a distinct and valuable asset class.

Moreover, digitally unique tokens are increasingly being recognized for their utility in verifying the authenticity of luxury goods such as art, jewelry, real estate, intellectual property or even pharmaceuticals. Leading brands are already issuing NFTs to certify high-value items like luxury watches, creating a new standard for authenticity and digital values such as art, secured by public blockchains, come with a proof-of-authenticity natively.

As digital certificates of authenticity become more prevalent, FIs have to extend and strengthen their positions as trusted custodians of digital certificates as well. By incorporating NFT-related services into their offerings, banks cater to the evolving needs of their clients and position themselves as forward-thinking institutions in the decentralized economy. As digital and physical assets converge, FIs can redefine how value is authenticated, stored, and accessed. This trend signals a significant shift in how value is perceived and managed, both in the digital and physical realms.

Integrating NFTs into banking services unlocks new revenue streams while effectively serving evolving client needs. This strategy leverages banks’ reputation as trusted institutions and complements existing digital asset services as well as traditional offerings, such as bank vaults and deposit boxes. Given banks’ established presence in markets for valuable goods such as art, they are well-positioned to expand into advisory services in these areas, too.

By integrating digital and physical asset management, banks can leverage tokenization for fractional ownership to enhance their value proposition by enhancing user experience and access. This approach not only offers financial benefits but also builds client trust, strengthens the bank's reputation for innovation, and positions it as a leader ready to drive future growth in the digital finance landscape.

Banks with experience in customizing and integrating cryptocurrencies, such as Ether and ERC-20 tokens, are well-prepared to handle NFTs based on standards like ERC-721. These standards allow the secure storage of unique digital assets, similar to how banks already manage the custody of physical unique assets like gold bars or sealed documents.

With operating models, wallet management systems, and robust blockchain infrastructure already in place, extending these services to encompass the storage of digital values is a logical and seamless next step. Moreover, this expansion can be achieved with minimal additional effort, as the necessary infrastructure is already in place, making it a cost-efficient opportunity to enhance banks’ value proposition.

Eine erfolgreiche Einführung einer Verwahr- und Handelslösung für digitale Werte wie NFTs erschliesst zahlreiche weitere Anwendungsfälle digitaler Vermögenswerte. Mit sicheren Systemen für die Verwaltung kryptografisch einzigartiger Vermögenswerte können Banken weit über die Bereitstellung von NFTs als reine Investitionsmöglichkeit hinausgehen.

In der Zukunft wird nahezu alles digital authentifizierbar sein. Die Fähigkeit einer Bank, wertvolle Güter sicher zu verwalten – ähnlich wie bei traditionellen Bankschliessfächern – wird bald zu einem unverzichtbaren Standard werden („Hygienefaktor“).

Are you ready to move beyond the confines of cryptocurrency and explore the extensive opportunities of other digital assets? Join us in expanding the boundaries of what a digital asset can be. Take the next step in creating a more comprehensive, engaging, and secure experience for your clients.