Discovery Bank’s product release events have become something of an Apple-type reveal in the spirit of Steve Jobs, watched closely by reporters and the industry every year. Luno was part of the announcement last week, partnering with Discovery Bank to make it possible for the bank’s clients to manage their Luno crypto wallets directly in its mobile app. The integration is set to go live in December.
It’s the first-of-its-kind integration in Africa between the crypto industry and what’s considered traditional banking. Crypto natives call it “TradFi”, traditional finance, but we may have to look for another term as these lines will increasingly blur through partnerships like this. Crypto will be finance, and finance will no longer be “traditional”. Kudos to Discovery Bank for forcing a rethink of the industry’s own terminology.
In 2021, South Africa’s intergovernmental fintech working group noted that “there is growing consensus that crypto assets and related activities are unlikely to go away any time soon”. It’s been a few years since that paper, and crypto is not just still here; it is everywhere.
This won’t be the last integration that eventually blurs, and ultimately kills, those neat boxes
It speaks volumes about how far the crypto industry has come, in South Africa and abroad. Not too long ago, it was difficult to get a meeting with banks. In the US there was evidence pointing to Operation Choke Point, which actively sought to choke the pipelines between traditional finance, the banks and crypto platforms. It also wasn’t too long ago that the South African financial regulator kindly requested that banks not cut ties with crypto-asset service providers. Some banks still have these restrictive frameworks in place, and they will fall behind.
This Luno-Discovery Bank integration will bring crypto assets to investors who may not have considered investing in the asset class previously by opening a separate exchange account, driving broader inclusion. But it also gives crypto exchanges a bigger role in traditional finance as a secure holder of assets and a facilitator of money movement in the financial system.
There’s the often-repeated story about the unseen, all-consuming hours of dedication that professional athletes put into their pursuit to make the impossible seem effortless, such as a rugby flyhalf who kicks balls over the crossbar one after the other, whatever the angle or distance. This integration with one of South Africa’s leading and most forward-looking banks feels something like that. It’s the unexciting work happening behind the scenes that makes these things possible.
It’s taken years of constant collaboration with South African regulators, hammering on compliance and a regulation-first approach, even to our own detriment at times, to make this partnership possible. The crypto industry has always been a tiny dot somewhere on the periphery of the larger financial system, but as the industry grows, the so-called traditional finance sector seems to be reaching out to crypto service providers to offer its clients crypto assets and other services.
As someone commented on social media after the announcement: “It’s one of those moments when the market quietly shifts gears.” Indeed. This won’t be the last integration that eventually blurs, and ultimately kills, those neat boxes like DeFi — decentralised finance — or TradFi. Soon we’ll just have to go with “finance”. “Fi” doesn’t really work.
De Wit is country manager for Luno South Africa
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