In today’s Exponential Investor

  • The unnamed editor
  • Getting “Canadian truckered”
  • Vote for your best crypto bank

A certain editor you may have seen recently sent me a WhatsApp message last week.

I won’t name him here…

He comes with booze on his breath and may or may not have a distinct Scottish accent.

But, no, I won’t tell you who I’m talking about.

His message was really just a picture.

Here it is…

Source: unnamed editor

He was trying to carry out a simple transaction with a cryptocurrency exchange using his debit card.

But TSB wasn’t having any of it.

I told him I wouldn’t use his name in this editorial in case TSB then went on to “Canadian trucker” him. Therefore, we are protecting his anonymity.

Sort of.

Anyway, he was fine with everything I write today. His question to me was simple. Which bank should he transfer to?

A very good question.

I didn’t have a very good answer though.

What if you’re Canadian truckered?

I’m guessing you might have similar experiences with TSB or other banks that have decided on your behalf that you’re not capable of managing your own risk.

What’s interesting is the banks treat some crypto exchanges differently from others. And some banks don’t seem to be bothered at all. Some want to go full Canadian trucker on you.

The annoying thing about it all is the inconsistency.

If you’re a bank like TSB and you’re going to block your customers from spending their money by depositing at a crypto exchange, that’s fine. Block away. Block them all. That way, at least we know that anyone who’s even remotely interested in crypto can completely avoid you as a bank.

Likewise, if you’re a bank that has blocked some customers before, but not others, just pick a lane. If a major bank such as Lloyds, for instance, were to come out and say “we don’t care what you do with your money, it’s yours to do as you like with, including on crypto exchanges”, I can guarantee there’d be an influx of new business.

It is easily one of the most frustrating things when it comes to crypto… but it’s not even a crypto problem, it’s a legacy banking system problem.

This is why, in my view, retail banks as we know them simply aren’t fit for purpose. The only unique thing they currently is provide relatively to access to mortgages. Even then, if you’ve ever gone through the process of trying to get a mortgage, it’s no simple task. It’s just that, if you want a mortgage… retail banks are the easiest route to getting one – alternatives just don’t really exist.

However, I expect that’s going to change as fast as the retail banking sector is evolving.

From FinTech to DeFi

Over the last decade one of the biggest disruptors to retail banking has been the rise of the “neobank”. FinTech (financial technology) challengers have grown from virtually nothing to become some powerful and market disrupting organisations.

Banks such as Starling, Monzo and Revolut are just some of the names you might be familiar with. These are not your century-old institutions like Lloyds, Barclays or HSBC. These are the banks that want to take the customer away from the legacy institutions. They are (at most) a decade or so old and deliver far better customer service (in my experience) than the older banks.

However… they also share a problem that many of the big banks have.

They’re not very “crypto friendly”.

I’ve experience first-hand a block on attempted transactions to a crypto exchange with one of the aforementioned neobanks.

Yet with my multi-century old other bank (also aforementioned), I’ve never had an such issue with any transaction attempted with any of the big exchanges, be it Coinbase, Gemini or Binance.

Either way, where the neobanks have been recent challengers to the legacy banks, there’s a new breed of “bank” that could disrupt them all, and that’s the rising DeFi (decentralised finance) “bank”. I’ve put the quotation marks around the work bank because these DeFi platforms aren’t traditional banks.

They are bank-like, with similar features, but not the traditional banks that we know.

More so, in this world of DeFi, ancillary services aren’t carried out by just one institution, there’s no one-stop-shop.

For example, in DeFi, you can find deposit accounts with certain platforms that can deliver anywhere from around 8% on stablecoin deposits to more than 43% on fiat-money deposits.

That sounds too good to be true. And many people will instantly dismiss it as such. But when you see it for yourself first hand, when you experience that kind of return and see that it’s real, you start to wonder why it’s ever taken so long to get into it at all.

But it’s not just deposits. You can borrow funds in the world of DeFi. You can get insurance. Also, many of the platforms are now offering up payment cards, credit cards and some of the more “traditional” banking products.

It’s still all very early stage, I might add. And there’s a fair share of risk and nuance you’ll need to understand before diving in. But when you see for yourself how money and banking is changing, learn about it, and then get into it, you’ll fast realise how much change is already taking place.

Finally, a poll

Just one thing before I go. I’d like to ask a question. All answers will be anonymous. I’d like you to tell me which of the traditional legacy banks are the best for crypto. This poll won’t cover them all, but it might give us an idea as to which is better than another.

So if you’ve never had an issue with Lloyds, for instance – personally, Lloyds has never blocked any of my transactions to an exchange – then vote for Lloyds being the most crypto friendly.

Catch my drift?

I’m curious to see if one stands out above the rest, or if it’s a mixed bag of good for some, not for others, or some that stand out as horrible for all.

Vote now…

Which bank is BEST for crypto transactions?

Until next time…

Sam Volkering
Editor, Exponential Investor