Sensing a business opportunity, Fort Wayne-based STAR Financial Bank has joined the fast-growing ranks of banks that offer cryptocurrency services to customers.
Earlier this month, STAR announced that it now give its customers the ability to buy, sell and store Bitcoin using its app.
Brian Avery, vice president of technology and digital strategy at STAR, said the bank launched the Bitcoin services in response to customer demand—and as a way to potentially win new customers.
“We have existing customers who’ve told us they are currently using other products to access cryptocurrencies,” Avery told IBJ via email. “We believe our offering provides them a faster, easier way to perform the transactions they already perform elsewhere. For customers who do not currently buy or sell cryptocurrency, we’re now providing a convenient and unintimidating way to get engaged.”
STAR’s partners in the effort are its banking app provider, Alkami Technology Inc., along with New York City-based Bitcoin company NYDIG, which is acting as custodian for the Bitcoin transactions.
Alkami, which counts 169 banks as clients of its platform, said STAR is the first bank in Indiana to offer Bitcoin services. Alkami’s target customers are community, regional and super-regional banks with assets of between $500 million and $100 billion.
STAR has $2.8 billion in assets and 36 banking locations, including 13 in the Indianapolis area.
Avery said STAR believes “there are additional opportunities within the cryptocurrency space,” and the bank will add new crypto offerings as demand warrants.
To date, banks have been hesitant to jump too quickly into cryptocurrency because its freewheeling nature is at odds with the cautious and highly regulated atmosphere of banking.
But that is changing rapidly, said Patrick Sells, NYDIG’s chief innovation officer and an Indiana native who previously served as CEO of Sells Group.
At the beginning of this year, Sells said, “I don’t think there were more than a couple of banks you could count on one hand [that were] live with the Bitcoin product.” By the end of next year, Sells said, NYDIG expects to be serving about 1,000 banks with Bitcoin services.
Among banks, Sells said, “everyone is in kind of a race” to add Bitcoin services.
The banks’ interest in Bitcoin is driven by customer demand, he said.
In a survey that NYDIG conducted in January, Sells said, 81% of those who own Bitcoin said they would move their holdings to their bank if the bank offered secure Bitcoin storage. And 71% of Bitcoin holders said they would be willing to switch to a bank that offered both traditional and Bitcoin-related products.
“That’s an important thing for banks to pay attention to,” Sells said.