The financial world is changing faster than ever, and blockchain technologies are playing a key role in this. At the same time, cryptocurrencies are no longer just an investment tool but have become an important part of the payment infrastructure.

In particular, companies are increasingly turning to cryptocurrencies to stay competitive: they provide access to new markets, reduce transaction costs, and allow them to work without intermediaries. But who is adapting faster — traditional banks or neobanks? And most importantly, what does this bring to business?

The Basics of Neobanking: How Do Digital Banks Work?

Neobanks are financial institutions that operate entirely online, without physical branches. They provide a wide range of banking services through mobile applications or platforms, providing customers with quick and convenient access to finance without the need to visit a branch.

The main difference from traditional banks is flexibility and technology. Thanks to automated processes, artificial intelligence, and cloud technologies, neobanks significantly reduce operating costs.

As a result, they can offer more favorable conditions: minimal or zero fees, fast registration, and a user-friendly interface for account management. Some of the best-known examples include Revolut, N26, and Monzo.

One of the most promising areas of neobanking development is the integration of cryptocurrency services. Today, more and more neobanks are offering their users the opportunity to buy, sell, and use cryptocurrencies for everyday transactions. There are several reasons for this:

• Demand creates supply. Every year, the number of cryptocurrency users is growing, and at the same time, more and more people are considering crypto as an alternative to traditional payment solutions. Neobanks are taking advantage of this opportunity and offering relevant services to meet the needs of their customers.

• Providing faster and cheaper transactions. One of the advantages of cryptocurrencies is their decentralized nature, which eliminates the need for intermediaries such as traditional banks. As a result, transaction costs and processing speeds are reduced, which contributes to the efficiency of cross-border payments.

• Transparency and security of the blockchain. Blockchain technology ensures transparency and high reliability, as each transaction is visible to all network participants and can be verified and confirmed.

• Portfolio diversification. Neobanks give users the opportunity to store both fiat and crypto assets, which allows them to diversify their portfolio and manage it through one platform.

Banks and Neobanks: Who is Already Working with Crypto?

Many financial institutions have been experimenting with the integration of digital assets into their services for a long time to remain competitive and meet the demand for innovative financial solutions. Let’s have a look at a few specific examples of the successful integration of crypto into the work of banks and neobanks.

JPMorgan

One of the largest US banks has become a pioneer among traditional financial institutions that has bet on cryptocurrency. Even though the company’s CEO Jamie Dimon has long criticized Bitcoin, the bank itself has stressed that it has always believed in the potential of blockchain technology.

Thus, in 2020, JPMorgan launched the first bank-baked cryptocurrency in the United States — JPM Coin — to conduct transactions between customers and provide instant international transfers.

In addition, at the end of 2024, the bank officially accepted XRP as a means of payment for retail transactions, including credit card and mortgage payments.

Citibank

Another major player in the financial industry that has expanded its services to include cryptocurrencies. In particular, in 2021, Citi launched a digital asset division to make it easier for its clients to invest in cryptocurrencies.

Later, in 2023, the bank introduced Citi Token Services, a new money management and trade finance service. The service integrated tokenized deposits and smart contracts into Citi’s global network, improving key financial management functions.

In the summer of 2024, Citi decided to go further and launch its digital asset platform to meet the demand of its institutional clients looking for new investment opportunities.

Revolut

As one of the leaders in neobanking, Revolut is also actively introducing cryptocurrencies into its operations. In May 2024, the company launched its crypto exchange for UK users, and a few months later, Revolut X became available in all 30 EEA countries.

In addition, Revolut also introduced its stablecoin, which was an important step in its cryptocurrency development.

N26

Another popular neobank that has integrated cryptocurrency into its services. In October 2022, N26 launched a tool that allowed its customers to buy and sell cryptocurrencies on the company’s mobile app. Cryptocurrency trading via N26 was initially launched in Austria and later expanded to selected markets such as Belgium, Ireland, Portugal, etc.

Collaborations Between Crypto Exchanges and Banks: How Does It Work?

Financial institutions can integrate cryptocurrency services through partnerships with crypto exchanges. Under such partnerships, banks provide customers with access to traditional financial instruments such as bank accounts or cards, while exchanges can expand their services.

For their part, exchanges can help banks implement blockchain technologies to improve the efficiency of financial transactions.

How does it work? With Crypto-as-a-Service, businesses and financial institutions, including non-banks, can create new sources of revenue by providing customers with convenient tools for crypto payments and access to the digital asset market.

CaaS allows companies to implement innovative payment systems and enter the international market with cryptocurrency services.

For example, an exchange integrates its services with a bank, expanding its functionality with cryptocurrency. After that, users can:

• Buy and sell crypto assets;
• Pay for goods and services using a digital wallet;
• Store cryptocurrency safely.

Businesses also get access to secure solutions for transaction monitoring and risk management. Importantly, they will be responsible for developing the user interface of global payments, as CaaS functions only as an internal tool.

That is, it allows integration of crypto services into the bank’s brand without third-party intervention.

At the same time, the crypto exchange takes care of such key aspects as KYC/AML, order processing, transaction monitoring, and storage of digital assets following the requirements of the jurisdiction.

Among the crypto exchanges that provide such services are the following:

1. Crypto.com

Users get the opportunity to:

• 20+ options for cash and cryptocurrency payments;
• Automatic invoicing;
• Various payment options — the possibility of one-time or recurring cryptocurrency payments;
• Inclusion in the Crypto.com Pay catalogue, and participation in joint advertising campaigns.

2. WhiteBIT

• Make deposits and withdraw cryptocurrency to their accounts;
• Buy and sell crypto assets for fiat money;
• Store all available crypto assets on a crypto exchange;
• Create a crypto wallet with 300+ assets;
• Convert cryptocurrency to fiat using the WhiteBIT API;
• The ability for users to receive assets in one network and withdraw them in another for all cryptocurrencies;
• Crypto is a Service based on white-label, which allows the company to provide it under its brand and ensure a stable experience for the end user.

3. Binance

• Over 100 digital assets supported;
• Direct debit/pre-authorisation — automatic collection of payments from customers
• Invoicing;
• Mass distribution of crypto payments to recipients for salary payments, loyalty programs, payments to suppliers, etc;
• Advanced API.

4. Gate.io

• 300+ available cryptocurrencies;
• Allows merchants to distribute funds to multiple wallet addresses simultaneously;
• Multiple payment methods;
• One-Stop Fiat On/Off-Ramps.

5. KuCoin

• Supports 54 cryptocurrencies;
• Several payment methods;
• Businesses get access to a large KuCoin user base;
• Users can use the platform for everyday purchases such as gift cards and mobile top-ups.

Such collaborations can have a significant impact on the capitalization of exchanges. Increased confidence on the part of financial institutions contributes to the growth of popularity and trust in cryptocurrencies, as well as their liquidity on exchanges.

As a result, this may lead to an increase in trading volumes and a rise in the capitalization of the exchanges themselves.

So,

Given the rapid development of technology, the future of finance is increasingly shaped by the intersection of cryptocurrencies and neobanking. The winners in this competition will be those who can adapt faster to new technologies and changing market needs.