Marc Andreessen famously explained “Why software is eating the world” seven years ago in the Wall Street Journal. Along the same lines, it’s becoming clear that “Security tokens are eating the world’s assets” (though that doesn’t have quite the same ring to it).

While it’s too early to understand which cyrpto/token schemes ultimately prevail, I am confident there will be many winners. This is especially true in the financial services/investing space. We will eventually see every significant asset turned into tradeable tokens (i.e., tokenization).

Tokenization will profoundly impact the investing space, but as a retail banking geek, I wonder what effect it will have on retail banking. Here are a few thoughts:

  • Banks will need to understand the space so they can serve their token-using customers
  • Banks will need to support direct transfers to/from various tokens
  • Banks will need to underwrite loans using tokens as collateral
  • Banks will need to take security interests in tokens to ensure they can claim the collateral in a default
  • Banks will want to use the value of tokens to determine their client’s net worth
  • Banks may want to allow customers to hold tokens directly in their bank accounts
  • Banks are going to need more layers of security

Action items
Tokens are like the Internet of 1994/1995, but with much more capital chasing them. If you want to be an early mover, you can start developing services now. But you have a number of years before you fall behind if you do nothing. With the Internet, it wasn’t until 1999 or so that Internet banking was moving beyond early adopters. And even then, unless you had an extremely tech-savvy member/customer base, you wouldn’t have lost measurable market share until the mid-2000s if you didn’t support Internet banking.

So you don’t HAVE to do tokens/crypto until early-to-mid next decade. But if you want to increase market share now, it’s already a significant opportunity. The leading U.S. crypto wallets have impressive website traffic

  • Coinbase has 31 million monthly unique visitors (16M from USA)
  • Robinhood has 11 million (10M from USA)
  • Coindesk has 11 million (2.6M from USA)

If you want to make points with your younger customers, along with the 10% of the country’s households that already have a Coinbase wallet, lean in to crypto and enable buying and selling or at least provide a secure transfer system to Coinbase and other leading wallets.

Note: Image from