Credit unions may consider partnering with Bitcoin exchanges such as Coinbase if they are to continue offering competitive international payments services to their customers, says a report from the Maynard-based Mercator Advisory Group.
Mercator Advisory Group is a globally trusted consultancy and advisory organization catering to the payments and the banking industries.
In the report titled Understanding Bitcoin’s Implications for Credit Union Services, the group touches upon the two grave concerns stemming the rise of Bitcoin, High Volatility and Security. Should the digital currency’s volatility reduce to generally acceptable levels and the security of private keys is ensured, credit unions may replace their core functions with Bitcoin.
“Assuming the volatility of Bitcoin drops considerably to what is considered normal for currencies, and that security concerns around how best to secure private keys are resolved, we could see the proliferation of a host of new financial services backed by Bitcoin, many of which are directly associated with the core businesses of credit unions today.”
Consumers Still Prefer Card Over Bitcoin
According to the report, consumers still prefer a reliable card network offered by established organizations like Visa, MasterCard, and American Express, as it provides fund protection and is accepted everywhere. Since Bitcoin’s value vacillates drastically, it is extremely tough to use the digital currency in retail transactions.
Mercator adds that it is still unclear whether adding Bitcoin functionality to a credit union’s wallet will be a cost-effective solution.
The payments research report advises credit unions to stay informed of the Bitcoin 2.0 innovations.
Mercator ends the report by stating that the technology will have profound implications for the financial services industry and compared it to the Internet Revolution. Predicting what exactly these implications will be, however, is a bit like trying to grasp the significance of the Internet would have been in 1995 – these are early days still.