Bank unifying its objectives: Ensuring digital asset ventures are secure and prosperous
In the rapidly evolving world of finance, coordinating digital asset strategies within banks and financial institutions has become a critical priority. A recent survey revealed that 52% of financial institutions are seeking help to establish standardized risk settings based on jurisdiction and business type for digital assets, highlighting the need for a more unified approach.
The siloed approach currently prevalent in many institutions creates challenges such as duplicating efforts, missing opportunities for synergy, and developing inconsistent approaches to digital asset engagement. To address these issues, a structured approach that emphasizes integration, standardization, and risk management is required.
One key strategy is to establish a clear governance framework. This involves defining the investment rationale for digital assets, setting allocation limits, developing guidelines for managing volatility, and ensuring compliance with local and international regulations.
Another crucial aspect is the implementation of institutional-grade infrastructure. This includes real-time performance dashboards, integrated reporting systems, and regular audits to maintain trust, ensure accuracy, and meet compliance standards. Enhancing security and custody solutions, such as cold storage and multi-signature wallets, is also essential to protect against theft, loss, or hacking.
Promoting cross-departmental collaboration is another essential component. Regular interdepartmental meetings, unified communication channels, and comprehensive training programs can ensure alignment and reduce misunderstandings. Adopting technology-neutral regulatory frameworks that focus on banking activities rather than specific technologies can also foster innovation and efficiency.
The future of finance relies on banks coordinating their approach across departments to capitalize on opportunities while managing risks effectively. With 77% of compliance and risk leaders within financial institutions seeing a compelling business case to progress their digital asset strategy, and 80% believing it is more useful to view crypto businesses as partners rather than competitors, the trend towards coordination is clear.
Banks could create mechanisms for awareness and coordination, allowing teams to maintain their independence while benefiting from shared knowledge and aligned strategies. Shared educational resources and centralized tracking of digital asset initiatives and operations across the organization are necessary to ensure a strong understanding of digital assets and consistent approaches.
With 76% of compliance and risk leaders believing they must advance their digital asset activities within the next two years to avoid falling behind competitively and financially, the time for action is now. As every department within a bank has a role to play in safeguarding the institution, it is crucial that they become deeply involved in digital asset strategies right away.
[1] Deloitte (2021). The Digital Asset Ecosystem: A New Era for Financial Services. [Online] Available at: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/uscs-digital-asset-ecosystem-a-new-era-for-financial-services.pdf
[2] PwC (2020). Crypto-assets: A guide to crypto-assets and how they fit within asset management. [Online] Available at: https://www.pwc.com/gx/en/services/asset-management/crypto-assets.html
[3] KPMG (2020). Navigating regulatory and compliance challenges for digital assets. [Online] Available at: https://home.kpmg/xx/en/home/insights/2020/03/navigating-regulatory-and-compliance-challenges-for-digital-assets.html
[4] Accenture (2021). How blockchain can transform banking. [Online] Available at: https://www.accenture.com/us-en/insight-blockchain-transform-banking-industry
In the push for standardization and risk management within the business sector, incorporating technology such as institutional-grade infrastructure and blockchain can provide enhanced security and efficiency for digital asset engagement. To facilitate collaboration and shared knowledge among various departments, creating mechanisms for awareness and coordination is essential to stay competitive and financially sound in this rapidly evolving technology-driven financial landscape.
