People often think of banks simply as financial institutions established for the storage and exchange of money. And while those are some of the primary functions of a bank, we’ve found that expanding our purpose and taking on alternative revenue streams allows us to build a healthier and stronger business that provides critical services to our community.
The diversification of revenue streams is healthy for all kinds of businesses. If you owned a downtown shop and depended only on foot traffic you might struggle during times of the year where traffic was slow. But if you open an online store you add a second opportunity to make money and protect yourself against financial downtimes. The same is possible in the banking industry.
As more and more small community banks are bought up by the corporate competition, we in the community banking arena continue to expand our businesses by incorporating alternative revenue sources into our business models. Here are two examples of alternative revenue that we are currently employing.
As of 2018 more than 14 million, Americans were living without bank accounts. That’s more than 5 percent of the population, leaving significant untapped opportunity right in your own backyard. People without bank accounts are still likely to receive checks from an employer or from social security and need somewhere to turn those checks into cash. We saw this as an excellent opportunity to meet a need in our community while also adding an alternative stream of revenue to our business. Other banks look down on check-cashing business and foolishly believe that it is beneath them. In reality, they’re leaving money on the table and a hole in the market for us to fill.
Another way in which we have expanded our business presence is by offering cryptocurrency services. If you’re not already familiar, the most popular cryptocurrency is Bitcoin. Cryptocurrencies are playing an integral role in addressing these imperfections. For instance, crypto transactions are more immune to data hacks compared to traditional transactions. Similarly, cryptocurrency transactions are anonymous and secure. If someone makes a payment to you using paper cash, there’s a possibility that the money could be counterfeit. This isn’t the case with crypto-cash since you cannot counterfeit a cryptocurrency. Regarding business-to-business payments, cryptocurrencies are cheaper because they eliminate the middleman, or another financial entity, and are direct payments. Cryptocurrencies can be converted to cash for a fee via banks and ATM’s that handle these services.
These are two of the ways that we have chosen to pursue alternative streams of revenue to strengthen and support our banking business. You may decide that these opportunities aren’t for you, and that’s absolutely your prerogative. What’s most valuable is that you find the hole in the market that only you can fill, and take some risks to fill it. As the banking industry continues to grow and become more competitive you will benefit from having established a strong and diverse portfolio.
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