FSI Member Spotlight Episode #10: Digital Currency, Culture, and the Future of Banking

For our final FSI Member Spotlight in 2020, Praxent Senior Director of Innovation, Lance Vaughn, had the chance to catch up with Patrick Sells. Patrick just transitioned from his former role as Chief Innovation Officer at Quontic Bank into his current role as Head of Banking Solutions at NYDIG, making this an opportune time to discuss the award-winning digital banker’s trademark take on purpose-driven innovation in the banking industry.

Before diving in, Patrick emphasized the bittersweet nature of leaving Quontic after nearly two and a half years, describing the quality of relationships formed and momentum achieved as positioning the digital community bank for 2021 to be its best year yet. Patrick became familiar with NYDIG as they’re a partner with Quontic, making the move both a logical next step and an easier one from an emotional perspective.

NYDIG is a premier institutional custodian of bitcoin that believes that digital currency and traditional banking not only can coexist, but should coexist. Patrick makes the distinction that NYDIG is not a crypto company in the vein of Coinbase or others, but is a financial services company that engages with bitcoin. This approach is rooted in a deep institutional understanding of regulations, compliance, and auditing, lending credibility to Patrick’s new role as Head of Banking Solutions. Patrick points out that over 40 million Americans own bitcoin today — this despite having to go through an outside exchange entity to make this happen. How many more people might buy, sell, or hold bitcoin if they could do so through a trusted banking institution? These questions excite Patrick and drive NYDIG towards continuing to hone the infrastructure they offer in partnership with banks who are also excited by these questions.

While Patrick is firm in his conviction that bitcoin will become integrated and mainstreamed, and the regulators have already begun clearing the path towards a future of technology and ease, he also recognizes some major obstacles. When prompted to address the challenges, Patrick emphasizes that traditional banks must be willing to take risks, and rapidly. Big tech and other major players are relegating banks to become more and more ‘behind the scenes piping’ in the machine of finance, and over the long-term, this is clearly not a viable option. Patrick does not want to see banks become ‘utility suppliers’ — particularly as they already have a headstart with their depth of experience in regulations and compliance.  This leads Patrick to another obstacle — banks that see each other as competition. In his view, banks should work together to innovate and scale up — and face the big tech threat head-on. In sum, the biggest threat to banks innovating and thriving is culture. Without change from within, digital innovation will matter very little.

Key Takeaways

• Patrick considers the greatest existential threat to the community banking industry a lackluster recruiting culture. Working at a community bank was once considered prestigious. Now, these banks struggle to stay relevant. Why? It is a symptom of the greater cultural shift towards digitally-native. To stay prestigious, community banks must prioritize attracting the digitally-native generation of talent with a refreshed, authentic cultural shift within their organizations.
• When faced with the common criticism that bitcoin is volatile, Patrick points out that offering bitcoin as a rewards incentive at a bank shifts the reward to risk ratio, mitigating much of the inherent risk behind investing in bitcoin which so many Americans currently take part in anyway. The ability to sell bitcoin via one’s banking institution is another draw, when compared with other traditional rewards incentives (hotel points, for example) which are illiquid.
• Patrick emphasizes focusing on the broadest definition of the term ‘innovation’ — doing things differently, thinking about things differently. This means changing culture and modes of thinking within the industry. All banks are, in a sense, digital banks — so the priority should be placed on fostering an innovative culture first, and digitally innovating second.

Additional Resources

• Patrick Sells, LinkedIn
• Quontic Bank: Home
• NYDIG Accelerating the Future of Finance

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