The year 2022 has been nothing short of brutal for the crypto industry, as a series of market capitulation tested the resilience of even the most zealous enthusiasts.
For institutional players, however, a crypto winter presents attractive investment opportunities. A recent study showed that 72 percent of high-net-worth individuals (HNWI) and family offices around the world remained moderately to highly interested in digital assets, despite the market crash triggered by Terra Luna’s collapse in May.
In preparing for the next upcycle, what is a critical aspect industry players need to focus on to capture and retain this important group of clientele?
User Experience is Key: Lesson from the Mobile Banking Revolution
The Private Wealth in Digital Assets Study 2022 identified “easier technology platforms” as the top catalyst that drives adoption among institutional investors, particularly with about seven out of ten investors who hold up to a quarter or more of their portfolios as digital assets.
While this could be unexpected on the surface, it draws parallel to how mobile banking has revolutionised the banking industry by allowing banks to provide more convenience to their customers in developed markets, and improve accessibility where there was a large unbanked population.
With crypto approaching the verge of mass adoption, the study shows us a similar trend: even among institutional investors, user experience is still key to adoption, as fund managers and HNWI indicated that they want to see better infrastructure to support trading and asset management activities.
As such, user-friendliness will continue to be a main challenge for many crypto companies to address. We’re seeing more players making good progress on this front, by launching one-stop platforms that allow users to not just trade (buy, hold and sell) but to manage as an investment portfolio all in one place, such as Matrixport’s digital wallet.
Accessibility Goes Beyond the User Interface
Crypto is an inherently technical topic that can be challenging for novice users to grasp. Overlay it with more financial jargons and it’s no surprise that many feel intimidated by digital assets.
Non-crypto native investors therefore need more than just convenience, but also an additional layer of advice and protection. On top of a good user interface, digital asset investment platforms also need to offer expert investment advice, similar to traditional banks. This is especially the case for more seasoned investors, who expressed that they would prefer to invest through crypto asset managers that can offer more diverse and specialised investment services.
As more institutional players enter the ecosystem, features such as custodial services will also be crucial to ensuring that they can fulfill stringent compliance requirements through transparent, efficient, and secured infrastructure.
When the Spring Comes
The industry has been resilient despite having gone through five crypto winters since 2017. The cyclical nature of this market means that this winter, too, shall pass. Furthermore, institutional investors’ enduring interest in digital assets further underscores the growing maturity and foothold of crypto in the world of TradFi. For now, crypto players are using this quieter period to continue building and revamping their product offerings, with a heightened focus on visibility, security, and sustainable yield generation.
Collaborative efforts between industry players will also be central to further propelling the industry, by creating synergies across different verticals and contributing to a more holistic infrastructure across the board. As the technology continues to mature, more TradFi players will tap into blockchain and DeFi to strengthen legacy networks, leading to a better financial system for everyone.