Another US bank has listed cryptocurrency as a threat to its business model, public documents show.
Regional banking institution WesBanco disclosed in its most recent annual report dated Feb. 27 and filed with the Securities and Exchange Commission (SEC) that the advent of new fintech products such as cryptocurrencies could cause them to lose clients.
From the filing:
“Additionally, banks and other financial institutions may have products and services not offered by WesBanco such as new payment system technologies and cryptocurrency, which may cause current and potential customers to choose those institutions.”
WesBanco is the latest addition to a growing list of banks that have labeled cryptocurrencies as business risks in annual reports for the previous fiscal year.
JPMorgan, Bank of America, and Goldman Sachs — the first, second, and fifth-largest US banks — have all cited cryptocurrencies and blockchain technology as business risks.
Goldman Sachs — which has quietly purchased ownership stakes in cryptocurrency-related fintech startups like Circle — acknowledged that these investments could decrease in value if flaws are later discovered in cryptocurrencies or the underlying blockchain technology.
However, JPMorgan and Bank of America each warned that cryptocurrency could prove to be a disruptive technology that reduces the need for third-party intermediaries, like banks. Each acknowledged that increasing adoption of cryptocurrencies would force them to make significant expenditures to remain competitive in such an environment.
However, for smaller regional institutions like WesBanco, the risks are more pronounced. The West Virginia-based firm operates 174 branches in the Northeast and Midwest, and it manages approximately $10 billion in total assets — a far cry from the $2.28 trillion in Bank of America’s care. Indeed, JPMorgan might be able to fund its own blockchain research center, for instance, but regional banks cannot afford these expenditures, and they will likely be slower to pivot if the industry faces a rapid, large-scale disruption.
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Last modified: March 4, 2021 5:05 PM