'The future of banking has no banks,' Bernstein says. Welcome to 'hyper-bitcoinization'

Quick Take

  • Any further banking mishaps could lead the way to hyper-bitcoinization, said Bernstein analysts. 
  • The future of banking might yet be decentralized, offering greater freedom to its users.

The recent banking crisis shows how bank runs have evolved, and any further accidents could prove pivotal for bitcoin, according to Bernstein analysts.

"Welcome to the new world of hyper-speed information flows and hyper-speed bank runs," Bernstein analysts led by Gautam Chhugani said, referring to the fervor on social media that heightened tensions around the time of the collapse of Silicon Valley Bank.

The week ending March 15 saw close to $120 billion in deposits leave regional banks, with over half heading for large banks. That crisis eventually made its way to Europe, culminating with UBS acquiring long-term rival Credit Suisse for a fraction of its value on March 19. 

Banks are dealing with a new risk, Chhugani said, which they "never fathomed previously."


Hyper-fast outflows aren't available yet but will soon be enabled by instant payment systems like the FedNow platform launching later this year by the Federal Reserve that will provide real-time, 24/7 access to payments for financial institutions of any size.

The new era of hyper-speed deposit outflows brings unknown counter-party risks for customers, and crypto might actually help alleviate some of those risks, Bernstein said.

"The simplicity of crypto as digital bearer assets solves for the immediate counter-party risks that bank customers are dealing with, but customers also require stability of value," Chhugani wrote.

Bitcoin might not appeal to customers who view stability in U.S. dollar terms right now, but that could change.

"As we head towards another pivotal moment in monetary history, savers would also watch for not just stability in nominal value, but if any further accidents force the Fed to breach the 'real value' of the government currency again," he said.

This would be the scenario some staunch bitcoin believers have suggested as the "final path to hyper-bitcoinization."

Old meets new

The benefits of smart contract-based decentralized financial systems would suddenly appear as "built for this world," the investment bank argued.

DeFi, in Bernstein's view, could facilitate a sort of new-age do-it-yourself banking system. 

"Instant liquidation of positions without any lag, do-it-yourself risk vaults on the blockchain, deposit stablecoins for revenue-based yields from financial protocols" is what the bank's analysts envision.

Banking would be more customized, intelligent and work in real-time — leading to more financial independence for the users of tomorrow, they said.

"The future of banking has no banks, we might make this our meme!" Chhugani and his colleagues wrote.

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