Small banks are leading in crypto adoption. Lessons for big banks 🧠; Secret ingredient making payments startups wow investors in current climate 💸; Amazon of LatAm to launch its own crypto token 👀

Good Morning FinTech, 22 August

Good day Everyone,

And happy Monday! There’s no better way to start the new week than reading an awesome newsletter 😎 And today’s issue is really hot as we’re looking at small banks that are leading in crypto adoption (+ lessons for big banks), a secret ingredient that makes payments startups secure funding despite economic worries (this is following a similar trend seen among challenger banks), and Amazon of Latin America which is set to launch its own crypto token (can it be big?). So let’s jump straight into the interesting stuff:

Small banks are leading in crypto adoption. Here's what big banks can learn💡

Trendspotting 🔍 Startups and smaller companies almost always move faster than their large competitors or legacy players. The same trend can be seen in banking and digital asset adoption.

More on this 👉 When cryptocurrency and digital assets started to get more attention globally, small banks saw an opportunity to compete and grow while providing a service that most larger banks stayed away from.

Hence, banks like Silvergate, Signature, Customers Bancorp, or LHV took on billions of dollars in deposits from crypto exchanges, investment firms, and stablecoin issues striving to become the de facto banking partners for the digital asset businesses.

A different year thus far 📊 2022 has been quite different thus far. The abovementioned banks felt that too:

• Silvergate Capital saw its deposits fluctuate by $5B in Q2. But by the end, deposits remained stable at $13.5B.

• Signature Bank reported a decline in deposits for Q2, only the second time this occurred over the past 10 years. The bank faced some struggles when one of its major clients, Celsius Network, filed for bankruptcy.

• As for LVH, while the banking group’s consolidated net loan portfolio grew by EUR 172M in a quarter (EUR 75M in Q1 2022), consolidated deposits decreased by EUR 44M (for comparison, a decrease of EUR 397M in Q1 2022), while deposits related to payment intermediaries decreased by EUR 94M (a decrease of EUR 397M in Q1 2022).

What does it mean? 🤔 Here’s why we are seeing these fluctuations, as well as the lessons to be learned by big banks aiming for a larger role in the world of crypto. Here’s the takeaway: