How a customer-centric crypto industry could help build resilience ahead of new regulations

How a customer-centric crypto industry could help build resilience ahead of new regulations

By Carol Chris (pictured), Regional General Manager at Australia and New Zealand, GBG


The rapid evolution of the crypto sector has continued to raise debate across the financial services industry, while also confirming that cryptocurrency is now far from being a fad. Recent research conducted by ASIC to understand the behaviours of retail investors found that cryptocurrency is the second most popular asset class, ranking only behind Australian shares.

With merely 20% of cryptocurrency owners considering their investment to be “risk-taking”, ASIC has voiced concerns that investors are unaware of the extent and complexity of risks of the crypto market. These concerns, which have been long-debated amid the rise of crypto scams, peaks and troughs in the value of popular cryptocurrencies, and the emergence of more players in the crypto sector, have grabbed the attention of the new federal government. Crypto reforms are currently being reviewed with the expectation that the sector and financial services industry overall will need to adhere to new regulations in the foreseeable future.

While these regulations are still being researched and developed, it is safe to assume that the security and safety of crypto investors will be a major priority for regulators. Some crypto service providers and businesses are getting ahead of the curve by proactively investing in and announcing greater measures they will take to protect users. As security continues to be a priority for consumers and investors across Australia, and as industry leaders continue to be questioned about their privacy and security policies, the opportunity to build business resilience and customer loyalty has never been greater.

The timing is ripe for investing in customer loyalty

More than half of Australians want to be able to transact in cryptocurrency, and a third want this to be possible both in-store and online. While merchants are scrambling to catch up to consumer demand, only a third have said they are ready to transact using cryptocurrency or will be ready within one year. Meanwhile, the Reserve Bank of Australia (RBA) will be running trials that enable crypto holders to buy everyday items like petrol, coffee, and food without having to convert crypto to fiat money first. As often happens, consumers are driving demand for digital services that businesses and regulators are struggling to keep up with.

Businesses that take a proactive approach to addressing consumer demands will immediately benefit from a first-mover advantage. Crypto service providers that help businesses adopt crypto solutions, while also providing secure experiences for consumers, will be best placed to build customer loyalty and prove market relevance regardless of what regulations impact the industry in the future. They will also be better positioned to quickly and effectively adhere to new regulations.

Customer-centricity is key to building digital trust

Being fast is not enough. Whether it is the fault of the traditional bank, crypto exchange, or another financial institution (FI) or not, it is common for consumers to blame these organisations when they are caught up in a crypto-related scam. Like any other scam, consumers expect support, refunds or other kinds of financial remuneration when they report a stolen identity or finances and are sorely disappointed in cases where this cannot be delivered.

In worst case scenarios, FIs lose a customer for life, and suffer extended reputational damage as that consumer spreads the word about their experience to their community and social networks. In the best-case scenario, the consumer learns from their mistake but is hesitant to engage with that FI again. The reality is almost a third of consumers would stop doing business with a brand they loved after just one bad experience.

Brands that simply shift the blame to the consumer or take a reactive approach to managing issues like financial fraud, identity theft, and scams will be the first to lose customers when things go wrong. Organisations that proactively anticipate the threats of financial criminals, the ways in which upcoming regulation will impact their operations and services, and prioritise the needs of customers over what is easiest or cheapest for the business to handle, will be the first to build digital trust.

As new regulations are expected to shake up the crypto industry in both the short and long term, investors will be eager to see which service providers are immediately deemed irrelevant due to non-compliance with the new industry standards, and who is left standing. The remaining players will not only need to compete for investors, but also prove they are serious about customer experiences and security if they want to survive and sustain customer loyalty as regulations continue to change over time.