For VASPs to institutionalize, they have to put optimal B2B customer engagement at the center of every move – across every area in the below chart:
At a channel level, practical online interfaces, structured onboarding experiences, and strict security features should be standard.
The next step is engagement management, and in particular, meeting the more specific needs of institutional investors and money managers. This group needs assurance that VASPs have adequate risk management, governance, expert analysis, audit trails, and technical execution. They also want the right level of support to orchestrate and execute on their investment decisions. Ben Radclyffe, Commercial Director, 100x Group, says this could be in the form of a ‘middle layer of expertise’, akin to the role of a broker in FS.
Finally, in the sales and operations space, VASPs can exploit state-of-the-art data analytics to support their workforce in making insightful decisions.
Some other ways to drive an optimal B2B customer experience include:
Institutional investors often face challenges in placing large orders, especially in markets with lower liquidity. Orders have to be broken down and split over multiple exchanges, which is a difficult process. This is where over the counter (OTC) desks and liquidity providers can help, as they can source and pool virtual assets to fulfil larger block orders in a more personalized way. There is an opportunity for OTC and liquidity related service offerings to be developed as part of a broader ecosystem, to ensure long-term growth and sector stability.
As VASPs scale in size, they need to standardize processes, and this is where a robust API-based (application programming interface) infrastructure can be beneficial. APIs allow access to value-adding software, opening up additional capabilities while keeping the customer experience streamlined. For example, traditional FS providers have entire teams dedicated to, or have outsourced, the confirmation process (validating transactions), given the large volumes of requests and monitoring effort needed. As VASPs face a larger demand for confirmation services, a good solution may be to apply a read-only API, where an exchange user can provide the API key to an auditor, who can then request and review the data.
A key part of growth is communicating with customers and taking them on the journey, and VASPs are getting more sophisticated in their approaches. VASPs are sharing expert insights, research and thought leadership via their websites and social media channels. Several players (e.g. Binance Research and Huobi Research) have started sharing in-depth analysis of virtual asset research projects, enabling people to follow and understand progress. In line with this, it is interesting to observe a shift in how traditional finance media is reporting on the industry, with publications such as Bloomberg and Forbes increasingly covering Virtual Assets industry developments and market prices.
Chloe White, National Blockchain Roadmap Lead for the Digital Economy and Technology Division at the Australian Federal Government Department of Industry, Science, Energy and Resources, says there is both innovation and competition on the horizon for VASPs.
“Early signs suggest that global financial services firms are becoming more open-minded to building crypto-asset functionality into their platforms, preparing to potentially encroach on the market share of digital currency exchanges. In the future, we can expect to see digital currency exchanges continue to innovate and broaden their business models in response. Their agility and greater appetite for risk will allow them to remain at the forefront of crypto-asset experimentation for some time, but they will also need to expand their customer base, including targeting businesses and institutions, to remain competitive in a world where large global corporations are exploring creating digital wallets and issuing tokens at scale.”