Neobank Meets Blockchain

September 26, 2022

Fortress is working to unlock the benefits of blockchain for every business — and that includes every bank. Next month we’ll be heading to Money2020, where “finance” and “technology” meet, to help fintechs develop their Web3 strategies. Last week we kicked off our ‘Road to Money2020’ series, with an overview of what Fintech needs to know about Web3, and we’ll do an industry-specific dive each week leading up to the event. 

This week, we’re looking at what Web3 — blockchain technology — can do for neobanks

Neobanks can remain ‘non-traditional’

Neobanks, challenger banks, tech-banks, banking apps. Whatever you choose to call them, they’re a ubiquitous part of today’s financial ecosystem. Since the crash of 2009, digital banking has worked to increase transparency between consumers and their financial lives; it started with layering technology on top of traditional banking systems so we could open, reference, and manage our accounts on mobile phones. Traditional banks followed that lead and invested more than ever in technological improvements.

Neobanks then brought us budgeting tools and faster money movement, and even advocated for fair consumer treatment by removing punishing fees. Again, the industry followed. Now, neobanks are poised to own even more of their customers’ financial lives thanks to Web3.

That history of moving the industry forward is a core advantage that neobanks have when it comes to blockchain technology. Driving innovation, respecting regulation. 

The opportunity: customers’ entire financial lives

The neobank objective was never to simply provide a delightful, tech-first checking account. The objective is to support customers at every step and stage of their financial lives. To “own” the relationship, to offer traditional banking products and services with the ease that has become trademark.

You can’t be the center of a consumer’s financial universe if you can’t support their future finances as well. We know 16% of Americans are already investing in or trading cryptocurrencies, and young adults 15-34 years old are leading in crypto adoption (according to PEW and CNBC). It’s clear that your customer’s financial futures include non-traditional finances — cryptocurrencies and digital assets. 

By building and planning for the growing adoption of crypto, neobanks can support their customers in the next wave of financial empowerment. You can educate, inform, and help your customers dabble (or jump into) decentralized finance and apply the same early principles of digital banking to Web3 – unlock capabilities beyond what the traditional financial ecosystem supports. 

That’s where Fortress comes in. You don’t have to be a crypto exchange to support cryptocurrencies, you simply need a partner that pays as much attention to the tech details as you, and can deliver the expertise and regulatory support to get you up, running, and unlocking new revenue and engagement streams.

Go beyond banking as a service

At this point, the acronym ‘BaaS’ has become a part of our nomenclature. The catch all “banking as a service” refers to any licensed bank offering banking services to a non-bank entity. These models were critical in bringing financial services to consumers via neobanks or other tech providers (as we’ve seen Apple, Meta, Amazon, Uber, and others start to dabble in financial services), but cracks have begun to show as regulators work to identify, and guard against, compliance concerns. 

Given the nascent nature of digital banking, tech teams have had to translate regulatory and compliance guidelines written for licensed entities — banks — into their own best practices. When a neobank or tech company is without the proper compliance and regulatory guidance, there is an inherent increase in risk to the consumer and the brand. 

With the increased regulatory scrutiny of neobanks, it’s more critical than ever that your partners are as compliant, regulated, and secure as they are technologically talented. Especially when you layer an entirely new wave of technology with Web3, blockchain, and cryptocurrency on top of that increased oversight. 

Fortress manages the intersection of innovation and regulation with our wholly-owned subsidiary, Fortress Trust. Fortress Trust is a chartered, regulated financial institution, helmed by Albert Forkner, the former state banking commissioner of Wyoming. 

Albert has spent the last 20+ years responsible for the supervision and regulation of all state-chartered banks, independent trust companies, licensed non-depository financial entities operating, and building the newly created blockchain/crypto-friendly Special Purpose Depository Institution. His work developing the first ever framework for regulating digital assets has fed into similar initiatives all over the world, ranging from regulators and crypto companies in Europe and Asia, to all the US regulatory bodies, to the FBI.

This means that as neobanks leverage our APIs to seamlessly integrate embeddable wallets, payments, compliance, custody, and crypto liquidity, they’re partnering with an industry-leading, regulated, compliant organization that cares deeply about protecting our partners and consumers alike.

Neobanks, NFTs, and more

Cryptocurrency is a clear starting point for most neobanks to integrate with Web3, but there is so much more than can be unlocked with blockchain technology — and the beauty of Fortress is that we’ve built the infrastructure to help you do it all. For example, we help neobanks across the following use cases:

  • Hold NFT and Crypto as assets, with streamlined account opening
    • Segregated accounts for easy deposits
    • Improve trust and adoption
    • Streamlined API-based account opening, with multiple verification levels to reduce dropoff
    • Protect assets
  • Accelerated on-ramp and off-ramp
    • For fiat or crypto account funding
    • Traditional bank account
    • Crypto trading account or crypto trust account
  • Always-on trading
    • Keep users on your platform, rather than sending them to a crypto exchange
    • Build in redundancy to avoid down-time
  • Embeddable wallet for crypto and NFTs
    • Build in to your platform with our APIs
    • Whitelabeled app
    • Custodial or non-custodial
  • Compliance & Regulatory Oversight
    • The only Web3 infrastructure with compliance baked-in
  • And there’s more!

We’d love to meet up at Money2020 to discuss how NFTs can be leveraged to build engaging loyalty programs, or how our data Vault enables private data and assets like a modern day, digital, safe deposit box. Reach out to Zack Fleischer to set up some time today!

BLOG

Want to learn more?

WHY FORTRESS

Learn how Fortress can help you build, scale, and grow your business.

Connect with our team of professionals in business development, blockchain engineering, financial services and regulatory compliance.