In a feature article for The Paypers, Tony McLaughlin argues that most banks continue to view stablecoins sceptically while a new financial paradigm is emerging around them. The choice is stark: develop a coherent stablecoin strategy or risk being sidelined as customers migrate to competitors.
The Overlooked Banking Opportunity
Banks have misunderstood stablecoins as specialised crypto assets rather than recognising them as the digital evolution of traditional banking products. In the paper era, banks provided chequebooks for money transfers. Today, they must enable the digital equivalent to fulfil the same customer needs.
Banks recognising this opportunity gain new revenue streams through redemption fees and FX spreads, enhanced client retention, first-mover advantage in the emerging digital asset economy, and protection against disintermediation by crypto-native competitors.
A Three-Step Implementation Roadmap
Step 1: Offer Hosted Wallets. Forward-thinking banks should provide hosted blockchain wallets to customers, allowing stablecoin receipt through shareable addresses. Banks can implement these quickly through scaling partners without building internal blockchain expertise.
Step 2: Connect to the Clearing Network. With customer-facing infrastructure established, banks connect to the Ubyx clearing system for efficient redemption processing. For a bank with 5% market share in a country capturing 5% of global stablecoin redemption flow, this represents approximately $91.25 million in annual revenue from fees and FX spreads.
Step 3: Issue Local Currency Stablecoins. Connected to the network, banks gain the ability to issue stablecoins themselves, creating powerful two-way flow that positions them centrally in the digital asset ecosystem.
The Competitive Imperative
A wait-and-see approach carries significant risks: customer migration, economic opportunity cost, strategic positioning loss, and digital relevance risk as transactions move to blockchain rails.
History demonstrates clear lessons. Banks unable to process cheques lost customers. Those unable to issue debit and credit cards became non-viable. Stablecoins represent a similar inflection point.