The institutional adoption of crypto and digital assets is at a higher level than ever. According to Ripple’s 2024 New Value Survey, the overwhelming sentiment among North American respondents is that digital assets and crypto will have a dramatic impact on business, finance, and society.
That being said, there is still some reticence, especially among North American organizations. Concerns about the lack of regulatory clarity and the potential for fraud, coupled with a reliance on legacy systems, have kept many of those institutions from adopting a modernized payments infrastructure that incorporates digital assets.
Key insights from the report are below, including the payments challenges that organizations face and the ways they’re leveraging blockchain-based solutions to overcome these challenges.
Digital Assets Will Impact Organizations Considerably
Ripple polled roughly 1,800 financial leaders across a spectrum of roles, including financial institution executives, fintech leaders, and commercial treasury management professionals.
Over 85% of respondents said that digital assets will have either a massive or significant impact on the business world. An even higher percentage anticipated that these effects would be even more substantial in the finance sector.
North American leaders’ expectations regarding the impact of digital assets on finance align closely with their European counterparts and are slightly higher than those from Asia Pacific. However, respondents from the Middle East, Africa, and Latin America expressed greater expectations for the influence of digital assets.
Blockchain was highlighted as a potential gamechanger across the board. Roughly 89% of respondents said they either use or plan to use blockchain-native currencies for payments, including stablecoins, central bank digital currencies (CBDCs), and cryptocurrencies. Use cases identified include the buying, selling, and trading of digital assets, payment acceptance, and cross-border payments.
Over half of North American participants believe that faster payment and settlement is the primary benefit of incorporating blockchain-based currencies, and that particularly applies to cross-border payments. The next most cited benefit was the always-on availability digital assets provide, followed by the cost savings they deliver.
There is Still Payments Progress to be Made
While organizations recognize the benefits of adopting digital assets technologies, there is still progress to be made in implementing the necessary technology and infrastructure to support crypto.
Approximately 70% of commercial leaders reported still using bank transfers, such as wire and ACH, for cross-border payments. Additionally, they relied more heavily on digital wallets and credit cards compared to their global counterparts.
The technologies they use to manage their cross-border money flows are bank platforms, payment providers, and enterprise resource planning systems, in that order. Treasury management systems like Kyriba ranked as the fourth most popular option.
Credit cards remain a fixture in the U.S. and may be one reason the country lags behind global peers in adopting emerging innovations like open banking, digital wallets, and other payment alternatives. The convenience and processing of credit cards—compared to ACH—are likely reasons why payment leaders rely on them, even in spite of higher fees.
As a result, the most frequently reported cross-border payments challenge for North American financial leaders is the high cost and fee structure associated with these transactions. When asked about the types of fees their business incurs most often in cross-border transactions, organizations cited foreign exchange fees, transfer fees, and platform fees as the top three.
Challenges with Cross-Border Payments Persist
After fees, respondents identified poor data security as their next biggest challenge with cross-border payments. This includes risks associated with incorporating digital assets, where many cited the security of the technology and price volatility as the most pressing concerns.
Personal career risk was another significant concern among respondents in North America, where it was notably higher than among peers in other regions. Enterprise finance professionals, in particular, expressed greater concern about reputational risks.
The fact that financial professionals are concerned that crypto advocacy could jeopardize their career indicates there still isn’t an overarching comfort level with digital assets and crypto in this region. This could be due to the lack of a clear regulatory framework for digital assets, or bad press about crypto fraud and other bad actors.
Blockchain-Based Benefits
While the concerns are genuine, financial leaders are hopeful that stablecoins, crypto, and CBDCs can ease several pain points for businesses. The top four issues that digital assets can help resolve are a lack of financial transparency, limited global payment network reach, poor data quality, and long settlement times.
These issues can be mitigated with blockchain-based solutions. For example, blockchain and distributed ledger technologies could reduce cross-border payment fees by minimizing the number of intermediaries involved in the payment flow.
This is particularly relevant for organizations sending payments in more exotic fiat currencies or in hard-to-reach regions. Blockchain can also eliminate the lack of liquidity and the settlement delays that can arise from processing through central or intermediary banks.
The transparent nature of blockchain can allay concerns about poor data quality by helping transaction parties verify payment details and reduce the potential for errors or fraud. In addition, the distributed nature of blockchain helps prevent unauthorized access and safeguards transaction data.
While there may always be price volatility concerns with certain cryptocurrencies, some cross-border payments platforms ensure customers are not subject to price fluctuations. For instance, Ripple Payments uses digital assets and stablecoins as a bridge between fiat currencies in a cross-border transaction.
With Ripple Payments, there is no need for additional intermediaries or correspondent banks, settlement is nearly instant, and customers aren’t required to hold crypto on their balance sheet.
Clear Payments Needs
Payments are fundamental to any organization’s success, and there will be increasing demand for convenient, secure, and instant transactions, especially in cross-border use cases. Though not all financial services companies suffer from many of the tech integration and maintenance issues that some of their global peers do, they are still hindered by legacy systems that come with increased fees and poor liquidity.
Overall, the sentiment of Ripple’s survey substantiates the assertion that digital assets technologies will continue to gain traction in North America. The main reason is there are clear payment pain points that crypto and digital assets can solve.
More companies will begin to centralize their business strategies around digital assets and the blockchain-based movement will gain momentum. Though there may be concerns around crypto now, as more financial leaders realize that crypto-based payment solutions are faster, more efficient, and less expensive ways to move funds around the world, these concerns will fade into the background.
