UNIFY Financial is the first credit union to offer transactional bitcoin support.
The credit union worked closely with regulators and fintech partners on the launch.
Product development is expected as the service matures.
UNIFY Financial Credit Union ($3.6B, Torrance, CA), is leading the way into cryptocurrency, becoming the first credit union to allow members to buy, sell, and hold bitcoin within their credit union e-banking accounts.
On UNIFY’s crypto landing page, the credit union says the new offer will allow members to take advantage of lower transaction fees than other providers and faster money transfer periods to fund bitcoin transactions. Plus, they can avoid sharing personal information with unfamiliar crypto companies.
According to Allied Market Research, the global cryptocurrency market is expected to reach nearly $5 billion by 2030 from $1.49 billion in 2020. Trading exchanges are quickly becoming rivals to the traditional stock market, too, but the list of financial services providers participating in crypto remains limited.
The only major financial services providers that support bitcoin are Chime, Ally, USAA, Simple Bank, and Goldman Sachs, according to banks.com. Each supports bitcoin in various ways, from exchange trading to checking balances only to complete transaction functionality. Bank of America, Chase, and Citigroup explicitly ban or limit bitcoin purchasing.
Greg Glawson, Chief Information Officer, UNIFY Financial Credit Union
Meanwhile, according to Pew Research Center, 16% of U.S. adults have invested in, traded, or used some type of cryptocurrency. That figure jibes with UNIFY member surveys, says Greg Glawson, UNIFY’s chief information officer. The credit union sees both need and opportunity here.
“We did extensive research into transaction patterns and usage of the most common cryptocurrency exchanges among our membership and discovered many members were already engaged in some kind of cryptocurrency investment,” Glawson says.
In fact, between Dec. 15 and the Jan. 4 launch, more than 2,500 members signed up for UNIFY’s bitcoin support waitlist.
“Being the first credit union to offer this service supports our focus on leveraging technology and emerging opportunities to support the changing needs of our members,” the CIO adds.
A Joint Effort With Tech Providers And Regulators
UNIFY is offering the bitcoin service through digital banking provider Q2 and bitcoin company NYDIG. Glawson says Q2 handles pricing movement information and executes orders between members and NYDIG, which it presents to members via the credit union’s digital banking platform and NYDIG’s virtual wallet.
But the credit union doesn’t leave all the work to Q2.
CU QUICK FACTS
UNIFY Financial Credit Union
HQ: Torrance, CA
Data as of 09.30.21
12-MO SHARE GROWTH: 9.1%
12-MO LOAN GROWTH: 2.6%
“UNIFY facilitates the money movement to and from the member’s account, daily settlement with the NYDIG exchange, and appropriate reporting to the member as well as to the credit union’s financials,” Glawson says. “UNIFY is also responsible for educational materials provided to the member as well as the presentation of information in the digital channel such as cryptocurrency balances and purchase history.”
If it all sounds very compliant, that’s because it is. The NCUA has been an ally in this effort from the start, Glawson says, trusting UNIFY to bring direct crypto support to the credit union industry.
“Being that cryptocurrency was unchartered territory for credit unions and our regulators, we wanted to ensure that we partnered with the NCUA in building out this program,” Glawson says. “They’ve been a critical partner that has been involved in the process since day one.”
That includes regular calls with NCUA vice chair Kyle Hauptman, the regulator’s legal counsel, Q2, and NYDIG to handle questions and concerns and ensure members’ best interest was at the forefront, Glawson says.
“Given that we are the first credit union to market, our regulators are looking to UNIFY to help them create guidance around cryptocurrency for the industry moving forward,” he says.
Beginning With Bitcoin. More Products To Come.
UNIFY started with bitcoin for several reasons. The NCUA was comfortable with how bitcoin is mined, processed, and operated. Plus, bitcoin has prominence and established history.
“Roughly 60% of all cryptocurrency trading is in either bitcoin or Ether [Ethereum],” Glawson says. “So, our members are most likely to be familiar with bitcoin.”
But the UNIFY CIO says this is just the beginning.
“It’s likely we’ll support additional cryptocurrencies in the future,” he says.
The evolving digital payments and crypto landscape in general also should present the opportunity to include cryptocurrency in several of the credit union’s existing rewards offerings.
Manageable Risk And Considerable Reward
There’s risk and opportunity for UNIFY. The market risk is being left behind as industry disruptors use crypto support to expand relationships with consumers.
“The other risk, but more easily managed, is balance sheet risk,” Glawson says. “Understanding what the current value of bitcoin is and planning appropriately for volatility.”
A top consideration for UNIFY is ensuring members can make well-informed decisions about whether cryptocurrency is right for them.
5 Tips To Launch Cryptocurrency
Being the first credit union to offer cryptocurrency support through e-banking required a lot of effort in a short timeframe, says UNIFY Financial CIO Greg Glawson. Here are five practices Glawson says other cooperatives should adopt before jumping into crypto support.
Put the member experience first. Use all technology to answer common questions before members ask them.
Educate, educate, educate. Make sure members understand what they’re getting into. Cryptocurrency is exciting, but members should know there is risk — money isn’t insured, and returns aren’t guaranteed.
Dedicate resources. Cryptocurrency is a 24x7x365 environment. Ensure the organization and processes can support it.
Develop processes and systems to track and forecast. Crypto is a non-traditional financial asset that does require management decisions on tracking and reporting cryptocurrency adoption.
Partner with great technology and product experts. Partnerships make all the difference, Glawson says. He adds: “A solid partnership with a clearly expressed goal, for the organization and the fintech partner(s), can bring about tremendous positive change for your organization and for the credit union industry.”
“Providing member education and easily accessible resources about how cryptocurrencies work, including the potential benefit and risk, are critical to ensuring those looking to buy/sell/hold cryptocurrency understand the inherit volatility of the asset,” Glawson adds. To that end, the credit union offers a “Cryptocurrency/Bitcoin 101” landing page.
Meanwhile, a place at the leading edge of change in the way consumers conduct business and “experience money movement” is a huge opportunity, Glawson says, and the credit union sees offering bitcoin support now and developing more crypto support going forward as a significant market advantage.
And although the credit union does expect to see some fee income from its crypto business, that’s not the bottom line.
“Because of the nature of blockchain cryptocurrency transactions, a fee is a part of each transaction, and UNIFY will get a share of the revenue,” Glawson says. “But we view this program as an opportunity to meet emerging member needs for cryptocurrency, providing members with a streamlined, convenient, and highly secure way to buy, sell, and hold bitcoin from within our e-banking platform alongside their traditional accounts — and not necessarily as a large income generator.”
Bitcoin and other cryptocurrency payment options are already available at some retailers, self-checkout stations, and ATMs, Glawson says. That’s just one way the opportunities are presenting themselves for credit unions to be active leaders in the emerging space, backed by their regulatory body.
“The NCUA was instrumental in UNIFY being able to accomplish this goal,” Glawson says. “I believe this is a huge opportunity for all credit unions and the industry.”
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