Blockchain makes inroads in investing, mortgages, payments, execs say

Feb. 13, 2022 10:21 AM ETWisdomTree Investments, Inc. (WETF), NBHCFBK, ICE, WAL, SNV, NYCBBy: Liz Kiesche, SA News Editor15 Comments

Blockchain technologies offer financial companies and their customers speed, efficiency, 24/7 execution, and cost savings, several financial firms pointed out in their Q4 earnings calls.

WisdomTree Investments (NASDAQ:WETF) Founder and CEO Jonathan Steinberg sees blockchain technology becoming ubiquitous in payments and financial services. "It's the convergence of blockchain technology with universal smartphone ownership and tokenization with smart contracts that will effectively blur the lines between savings, payments, and investing, fundamentally changing the way consumers view and interact with their own money and assets," he said during the company's Jan. 28 earnings call.

Specifically, the company's WisdomTree Prime, its upcoming digital wallet that's native to the blockchain, "will bring the look and feel that users are accustomed to from traditional mobile apps, while at the same time offering the benefits of the digital financial services experience built on DeFi principles," Steinberg said. WisdomTree Prime will be launching its beta test in select states in Q2 with a national rollout by year-end, followed by introduction in some global markets.

"As a first mover in launching blockchain-enabled funds and tokens, we have an opportunity to dominate the market in both beta and alpha generating strategies, large addressable markets where we can generate great economics, scale quickly, and significantly accelerate organic growth," WisdomTree's Steinberg said. It expects to unlock new neo-bank-like revenue streams, such as payments, transactions, and net interest income, diversifying Wisdom Tree's (WETF) top line and accelerating organic growth.

"We are so confident that assets will move to the blockchain because the efficiencies and enhancements are just too substantial to be ignored," Steinberg.

National Bank Holding's (NYSE:NBHC) 2UniFi platform is intended to be the equivalent of the Amazon marketplace for financial services for small- and medium-sized businesses with alternative digital access to an array of financial services. Part of that is access to blockchain payment tools.

Last month, the company's NBH Bank unit minted USDF stablecoin and sent it to a customer of New York Community Bank, a subsidiary of New York Community Bancorp (NYSE:NYCB), as a test to demonstrate bank-to-bank interoperability on the Provenance Blockchain, a public blockchain.

The transaction "not only demonstrates the bank interoperability of USDF, but also demonstrates the ability for banks to offer their clients new and safe payment applications with real time settlement at a low cost," said Valerie Kramer, chief digital officer at NBH Bank (NBHC). "USDF facilitates the compliant transfer of US Dollar value on the blockchain, removing friction in the financial system and expanding digital access to financial opportunities."

NBH Bank, New York Community Bank (NYCB), First Bank (NYSE:FBK), Sterling National Bank, Synovus (NYSE:SNV) Bank, Figure Technologies, and JAM FINTOP are founding members of the USDF Consortium.

FB Financial (FBK), also part of the consortium, sees "nearly limitless" use cases for the USDF stablecoin, "and in every case it provides efficiency and enhanced experience both for us and our customers," said President and CEO Chris Holmes during the company's Jan. 18 earnings call.

Two areas that FB Financial (FBK) focuses on are the mortgage sector and its manufactured housing business. "We know that the manufacturer and delivery in sale of mortgages can be done at a significantly less costly manner using blockchain technology," said FB Financial (FBK) Chief Administrative Officer Wade Peery. In payments and settlements, "we will be able to cut substantial costs out of those systems and get 24/7, 365 real-time settlement on blockchain."

Western Alliance Bancorporation (NYSE:WAL) also points to the 24/7 advantages of blockchain systems. It started a partnership with Tassat Group in December to deliver blockchain-based payments to clients using TassatPay's platform. Set to launch in early Q2, the program will allow Western Alliance Bank clients to transfer funds to each other 24/7, WAL President and CEO Ken Vecchione said on the bank's Jan. 28 earnings call. That program isn't yet factored into Western Alliance's (WAL) guidance for deposit growth, but will once it gets a sense of how the launch fares, Vecchione said.

Intercontinental Exchange (NYSE:ICE) Chairman and CEO Jeff Sprecher focuses on blockchain technology' use in the mortgage sector. "The main value is it creates an indelible record. And so to a certain extent, property rights are something that society views as an indelible record," he said during the company's Feb. 3 earnings call.

And from a brokerage viewpoint, blockchain and the broader cryptocurrency environment "has really been used as a marketing tool to move people from more analog brokerage houses to more digital brokerage houses and gives customers direct access," Sprecher said. "So those brokerages that didn't engage their customers digitally are seeing themselves somewhat being disintermediated by new brokers that are digital."

In a related read: SA contributor John M. Mason discusses blockchain's future in finance

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