Traditional Banking Sector and Private Banking Development: 2024 Forecasts

The financial industry will face a lot of changes in 2024 due to the development of technologies, the increasing popularity of cryptocurrencies, and the changing corporate environment. Today, many companies and investors provide not only traditional banking services but are gradually switching to decentralized finances (DeFi) as well. 

The supply grows along with the demand. As customers and institutional investors are interested in cryptocurrency and digital assets, large US, German, and even Swiss private banks have expanded the range of their services by implementing blockchain technologies and developing smart contracts.

Let’s take a look at the way private banking is developing and responding to the popularity of cryptocurrencies and the reasons why many customers and private investors are interested in tokens. We will see which banks are ready to create a crypto account for you today or propose digital asset management services to wealthy customers.

Banking Sector Development in the Near Future: Expert Opinions and Facts

Recent research conducted by Capgemini, a consulting company, showed that more than 80% of wealthy foreigners invest in digital assets. The majority of customers belong to the millennials (Y) aged under 40. 

Interest in cryptocurrencies and investments in digital assets is confirmed by the forecast and evaluation of the financial industry made by Boston Consulting Group (BCG). According to BCG experts, market capitalization of cryptocurrencies may increase 4- to 5-fold as early as 2030.

Which Countries Are Open for the Banking Sector Improvement?

Cryptocurrency is the largest blockchain-based digital asset which has attracted more than 300 million investors globally. Right now, you can observe the private banking sector’s upgrading at the background of the investors’ global interest in this currency. 

For instance, starting from January 11, 2024, 11 FTF funds of the United States of America obtained a permit from the Securities and Exchange Commission to invest in Bitcoin. Today, it has become possible on the New York Stock Exchange (NYSE), NASDAQ, and Chicago Board Options Exchange (CBOE). Private and institutional investors that have access to exchange trade can invest in such funds.

In addition, many private banks started to offer cryptocurrency management to their customers as part of private banking services:

• The large American bank Morgan Stanley became one of the innovators as it gave its customers the possibility to invest assets in Bitcoin through special funds back in 2021.
• BBVA Switzerland banks have expanded the range of products for private customers, so they can now order the storage of their Bitcoin assets.
• In 2022, the Italian Banca Generali became a co-owner of the Conio crypto exchange by combining traditional financial products with crypto trading.
• The Singapore-based DBS bank offers similar services. 

FYI: in 2024, the European Union is planning to introduce a single legal framework and licensing structure for all jurisdictions in the EU – MiCA (Markets in Crypto-assets) to enable complex cryptocurrency regulation in 27 countries. At the same time, you will still have to comply with the rules of fighting financial fraud, tax evasion, and financing terrorism regulations (AML).

What Will Happen to Private Banking in 2024?

Private banking, or wealth management, includes banking services for VIP customers who usually possess considerable capital. Private capital management includes a lot of instruments, and crypto management has recently become a part of them. This option is not just the whim of banks but the necessity as this direction is selected by many investors.
After the tokens have been included in the list of financial products, the customer base of private banking will increase. For example, many banks have concluded partner agreements with crypto and fintech companies. It will help them study innovative methods of digital asset implementation in traditional services and later provide global-scale services.

Advantages of Private Banking for Crypto Investors

Despite high commissions and rates customary for large crypto investors, private banking has its advantages:

• A private banker who will answer the questions and help you solve financial problems. 
• Going beyond standard approaches: any issues will be resolved in a customized way (they may be related to compliance verification, documents, or investments). It is important for the banker to attract and retain the VIP customer as his fee and the bank’s reputation are at stake. 
• The range of a private bank’s offers is much wider than a traditional banking institution may propose. This is related to cryptocurrency as well as it has become one of the popular investment options. 

Private banking is in line with the current financial market trends where digital currencies have become more important than they were ten years ago. The customers of private banks can now get loans and provide collateral not only with ordinary assets (including jets, yachts, gold, or real estate) but also with cryptocurrency. 

Which Banks Are Ready to Start Working with Crypto in 2024?

• US investment banks, such as JP Morgan Chase and Goldman Sachs, are creating special teams to develop and implement blockchain technologies and work with cryptocurrencies.
• Swiss banks are launching services related to cryptocurrency (Bitcoin, Ethereum) storage and trade for separate customers. St. Galler Kantonalbank offers digital asset management services in partnership with SEBA Bank. All of this makes it possible to freely integrate cryptocurrency in your investor’s portfolio.
• The Austrian Raiffeisen Bank is expanding the list of services by implementing crypto trade options for private customers. Raiffeisen Bank has become a partner of Bitpanda exchange (registered in Vienna) and expanded the range of its services to include trade, investment, and storage of cryptocurrencies, shares, commodities, and precious metals. 
• At the end of 2023, the Brazilian bank Itau Unibanco declared it would launch a crypto trade service and a digital asset storage service for its investors. The users of the bank’s investment platform can trade Bitcoin and Ethereum.
• One more investment bank in Brazil, BTG Pactual, is planning to launch cryptocurrencies for its customers along with MB exchange.
• In Germany, Commerzbank announced that it had received a license giving it the right to store the customers’ crypto assets back at the end of 2023. In addition, the management is planning to create a blockchain-based platform for due storage and protection of crypto assets.

You can choose a bank to store your crypto assets in and open an account right now – however, we strongly recommend relying on the appropriate assistance of experts and consultants.

Which Country Boasts the Highest Number of Crypto Holders?

According to statistics, the ranking of crypto assets holders by countries looked as follows at the end of 2023:

• Brazil – the number of crypto holders made up 41% of the population. At the same time, 45% of residents are planning to buy Bitcoin, Ethereum, Stellar, Litecoin, Bitcoin Cash, and Chainlink.
• Indonesia is also among the three leading countries where 41% of the population chose cryptocurrency as the main asset. 
• The United Arab Emirates (UAE) takes the third position by the percentage of the population that invests its money in cryptocurrency. 35% of the UAE residents own crypto assets, while 49% of them are considering such investments in the near future. However, cryptocurrency is not yet legalized in the Emirates as a payment means, so you have to convert it into fiat or use direct transfers from the exchange or wallet to the bank account. Such options in the banking system will help to accelerate the process in the future.
• In Singapore, 30% of residents own cryptocurrency, and it is legal to trade crypto assets in the country. However, it is not used as a means of payment currently, which may change in the near future.
• In the USA, the share of crypto assets owners made up 20%, and a part of them consider cryptocurrency to be a means of protection against inflation (40%). Meanwhile, 23% of the country’s overall population thinks that cryptocurrency will replace the traditional dollar in the foreseeable future.
• The United Kingdom is last but not least in the list of countries where cryptocurrency is popular among the local population. In 2023, 18% of UK residents invested their funds in Litecoin, Ethereum, and Bitcoin. It also became known that Paypal has launched a cryptocurrency service called Britcoin in the United Kingdom.

According to experts, the number of investors in Bitcoin and other cryptocurrencies will increase in 2024, and it will influence the interests of wealthy private investors and businesses alike. Right now, we see a surge of interest in cryptocurrencies among legal entities that find it important not only to manage their capital but also to invest at a profit.