RBC Capital Markets says that European banks including HSBC and Deutsche Bank will lose revenue because companies are starting to use cryptocurrency for their payment needs.
The RBC analysts published their findings in a Wednesday note, which indicated that banks with substantial corporate cash management operations face the biggest risks from this trend. The company provides services that allow them to manage cross-border payments while maintaining their operational capacity through cash flow management yet digital assets could disrupt these functions through their adoption.
RBC discovered through its survey of 18 European banks that 72% of respondent banks consider digital assets to be most applicable for international payments between different countries. Analysts described corporate payments as the area “nearest to market,” meaning adoption could happen relatively quickly compared to other use cases.
Cross-border payments seen as key entry point for crypto
The report warns that, depending on how fast digital money grows, some banks could lose up to 7% of their revenue. The organization faces risks because two factors exist, which include rising funding expenses and decreasing fee revenue as customers start using different blockchain-based payment methods.
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The banks studied show that HSBC and Deutsche Bank face the highest risk because their corporate payment services generate 10% or more of their total revenue. BNP Paribas also has a significant presence in this area, although it represents a smaller share of its overall business. Most banks currently treat digital assets as secondary assets, according to multiple financial risks that they face. The survey showed 83% of respondents who use crypto services that they already have.
The survey found 67% of respondents needed stablecoin services, whereas all participants stated that stablecoin services had no effect on their liquidity and treasury operations. The banking industry recognizes emerging trends. Deutsche Bank and Barclays and BNP Paribas and other financial institutions are currently researching different options which exist within the crypto industry.
Financial institutions want to create new income sources through their involvement in bank-operated stablecoin projects. The results show that companies have just begun adopting crypto technology but it will slowly transform banking operations which involve payments and customer interactions during upcoming years.
