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Finastra partners with Bakkt to offer crypto services to community banks, credit unions  

Bakkt is valued at over $2B and owned by the Intercontinental Exchange

Jaspreet KalrabyJaspreet Kalra
October 22, 2021
in Payments
Reading Time: 2 mins read
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Financial services software provider Finastra has tied up with Atlanta-based crypto exchange Bakkt to offer digital asset trading solutions and services to community banks and credit unions.

Image by CanStock

The partnership will let smaller financial institutions enable customer access to a digital asset marketplace and wallet services offered by Bakkt, the two firms announced last week. Bakkt, owned by the Intercontinental Exchange, which operates the New York Stock Exchange (NYSE), made its public market debut Monday via a merger with Special Purpose Acquisition Company (SPAC) VPC Impact Acquisition Holdings. The deal valued Bakkt at about $2.1 billion and it trades on the NYSE under the ticker symbol “BKKT.”

In conversations with community banks and credit unions, the crypto topic keeps coming up, Philip Taliaferro, head of fintech ecosystem at Finastra told Bank Automation News. “And that sent us down a course of looking for partnerships in bring a crypto wallet [and exchange services] to our community financial institutions,” he said.

Finastra and Bakkt have an agreement to release an app offered under the partnership that allows financial institutions to offer account holders access to the crypto market without having to leave their existing banking environment.

Finastra has also formed a partnership with Allied Payment Network, a payment solutions provider, to offer its customers a bitcoin wallet that Allied has created in partnership with the New York Digital Investment Group (NYDIG). The link-up was announced in September and the wallet has been built on Finastra’s open developer platform FusionFabric.cloud.

“Finastra was a natural fit to help expand the reach of Bakkt’s digital asset ecosystem,” Sheela Zemlin, chief revenue officer at Bakkt, said in a statement. Finastra was attracted to the Bakkt partnership because it is not “a fly-by-night outfit,” said Taliaferro, adding that the link with Intercontinental Exchange, a very heavily regulated business, made Finastra feel confident that Bakkt understood the nuances of servicing customers via traditional financial institutions.

While the community banks, credit unions, Finastra and Bakkt haven’t yet determined the fees to be levied on customers using the services, Taliaferro said “my steer is going to continue to be that we should try to make this not a money-making endeavor for the FIs, if their objective is really to figure out how to broaden the client relationship.”

While crypto assets have certainly exploded in popular imagination — and prices — during recent months, credit unions and community banks aren’t likely to have much flexibility in deciding fees, given that customers can always buy the same assets on an exchange like Coinbase or Kraken, among others.

Bakkt was founded in October by former U.S. Senator Kelly Loeffler (R-GA) and is backed by the likes of Microsoft and Boston Consulting Group. While SPACs have been on a run this year, Bakkt’s was met with a relative lack of enthusiasm, as roughly 41% of the shareholders in VPC chose to redeem or get their money back on the listing, according to deal documents, as opposed to staying invested.

Shares of Bakkt [NYSE: BKKT] were trading at $8.23, up 2.49% at 10:30 a.m. today. The firm has an overall market capitalization of $176 million.

 

 

Tags: Core Bankingcrypto exchangeFinastraPremiumSPAC
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