SME Retail CEO Digital Currency Playbooks Are Afoot! Image by Gerd Altmann from Pixabay

2022 SME Retail CEO: How To Reshape Digital Currency Playbooks

Over the last two months, the 2022 Crypto Winter 2.0 has accelerated massive losses for the top cryptocurrency leaders. Today, the overall cryptocurrency, especially Bitcoin and ecosystem/platform valuations, are evaporating rapidly with over¬†$2+T¬†losses. Many retail SME CEOs are rethinking their digital currency playbooks. Over 75% of Retail C-suites are now reshaping digital currencies’ playbooks for right-sizing funding and risks!

According to Analytics Insight, cryptocurrencies lost about $900B from May 1 to June 19, 2022, and should keep falling. Most SME retail corporations and investors were shocked that so many prominent leaders of stablecoins, exchanges, and platforms lost billions in a week and could or had just collapsed, such as Celsius! 

It’s not just the cryptocurrency; many crypto exchanges/platforms without liquidity are also failing!¬†

“Only when the tide goes out do you discover who’s been swimming naked.” –¬†Warren Buffett.¬†

SME Retail Boards and CEOs are well-advised to do deep-dive reshaping and ROI planning for a future digital currencies playbook in their businesses.

Pivotal Retail CEO Digital Currency Playbook Takeaways:

  1. Evaluate and align the strategic intent of the SME Retail Corporate Board/CEO Digital Currency Playbook horizon position before 2025.
  2. Craft/reshape in 2023-2025 Retail Digital Currency Playbook planning with right-sized funding for evolving crypto impacts, risks, and rewards.
  3. Refresh/skill up the Corporate Board, CXOs, and enterprise workforce on FinTech technologies, platforms, and ecosystems.
  4. Adopt/leverage proven FinTech leaders in financial services, global exchange payment platforms/ecosystems, and advanced cybersecurity.
  5. Track, comply, and leverage new regulatory changes and risk impacts globally, especially in ECB and US. 

Here are your CEO’s strategic playbook actions to maximize ROI and right-size risks.¬†

2025 CEO Digital Currency Playbook Horizon

Today, 85+/-% of SME Retail CEOs plan to use digital currencies in their business operations for customer transactions. The global innovation space will develop newer liquid stablecoins or digital currencies from the government and financial services sectors for retail customer payments. However, it will require reshaping yearly as new regulations and reporting.

Why? Today’s SME digital currency for the new global landscape must support:

  • Launching of EU, UK, and US central bank digital currencies (CBDCs), among others.
  • Solving/innovating new customer pay expectations, and¬†
  • Adopting new FinTech digital technologies, including AI’s ML and Big Data Cloud Computing.

Many SMEs should plan for “real” asset-backed, liquid stablecoins, national digital currencies, CBDCs, or fiats. Plans include collaborative liquidity exchanges/platforms too.

Most CEO Digital Currency Playbooks will be executed by 2025, depending on the SME sector and digital currency maturity. Less than half of the CEO trailblazers have an earlier 2022-23 Playbook. 

SME Retail Sectors Require New Playbooks

Sectors that should have a 2023-2025 Corporate Digital Currency Playbook are consumer-based retail businesses, such as Digital Consumers, Electronics, Financial Services, Hospitality, and Transportation/Travel products and services. 

By 2025, SME retail, institutions, and individual payments trends will be phasing out traditional credit cards for new payment services, such as Digital Currencies, Request to Pay (RTP), and AI-based Buy Now, Pay Later (BNPL). 

SME CEOs¬†should monitor FinTech merchant trailblazers for newer services from¬†PayPal, Plaid, Square, Melio,¬†Klarna, Stripe, Affirm, and for China’s merchants/customers-Ant, FinancialAli Pay,¬†and WeChatPay.

In addition, Big Tech, such as Apple and Amazon, and FinTech leaders in ecosystems and platforms, including Apple Pay, Zelle, Amazon Pay, and PayPal tracking for new consumer services. Note: These Fintech leaders score high on customer privacy and security. 

SME CEOs Actions: 

  1. Evaluate/use digital currencies/fiats audited and backed with liquid and stable assets, such as coins from national governments and global financial services institutions with strong FinTech talent and reserves. 
  2. Consider/leverage proven extensive FinTech financial services low-risk platforms and ecosystems‚ÄĒfor example,¬†Chase¬†Orbital Virtual Terminal,¬†JPMorgan¬†Onyx,¬†Visa Settlement Platform¬†for USD/USDC, and others.¬†
  3. Track/evaluate new institutional and well-funded startup FinTech solutions for fit/cost/risk.

SME CEO Digital Currency Playbook Funding Trends

SMEs are trending for innovative services before 2025. Today, many SME CEOs are interested in the retail sectors for industry leadership and early adopter trailblazers. However, SMEs can now be ready for innovative financial payment solutions, including infrastructures. 

Various retail research studies show SMEs’ Digital Currencies Playbook funding ranges vary from¬†$90K to $1.2+M.¬†It could be higher under today’s regulatory unknowns. For example:

  • Small SMEs’¬†revenues of¬†$12M¬†to¬†$200M¬†to be cost-effective, budget from¬†$90-125+K. Note:¬†If revenue is less than¬†$12M,¬†use an outsourced turnkey financial services solution.¬†
  • Mid-size SMEs’¬†revenues of¬†$200M to $800M,¬†budget between¬†$150+K to $700K.
  • Significant SMEs¬†revenues of¬†$1B+/-,¬†¬†budget between¬†$800K¬†to¬†$1.2M, all-in cost from planning to execution.¬†Note:¬†SME internal integration planning will be critical to managing crypto program costs.¬†

A recent 2022 Deloitte internal research¬†report¬†illustrated in a retail executive survey that around¬†73%¬†of SME digital currency investments could range from¬†$100M to $1M, which may be a core funding data point.¬†Note:¬†The survey of 2000 executives’ roles is missing their titles for more significant insights. Still, these are all just early estimates for planning.

Reset Retail FinTech Talent for Skill Shortages

Today, it’s no surprise that there is an innovative skill shortage in many domains, especially FinTech blockchain and digital currency infrastructure, platforms/ecosystems. SME external recruiting must be ongoing, especially at innovation-focused universities and FinTech events.

With these FinTech talent shortages, SMEs require a comprehensive crypto/FinTech training program led by the CHRO/Talent Officer to support enterprises. It has three critical tracks with skill areas: Corporate Board, C-suite, and Workforce. 

“Blockchains have the potential to clear and settle transactions in a more efficient way than traditional technology”¬†¬†Sarah Hammer,¬†University of Pennsylvania Law School

FinTech skills required are AI and Blockchain Fundamentals, Bias, Ethics, Limitations, Regulations, Risks and Applications, and Cryptocurrencies/CBDCs using Platforms/Ecosystems.

  • Use an independent advisor or FinTech university for a custom short one-day briefing for the Corporate Board and C-Suite.
  • For the executive education FinTech programs, consider the best-targeted outcomes at Harvard,¬†Wharton, Berkey, MIT,¬†and Stanford Business.
  • For targeted functions in the enterprise workforce, consider augmenting skills with online short FinTech universities courses for¬†free/near-free¬†MOOCs, Coursera,¬†Udemy, and others.

Why use External Fintech Services/Platforms?

For SMEs, it makes sense to leverage external and third-party apps, platforms/ecosystems, and blockchain services for lower costs and risks. Too many SME DIY have largely overrun the programs or, in some cases, canceled for time-to-market, or their project missed targeted ROI.

“Blockchain is here to stay in the future” David Rubenstein, Carlyle Group, Inc

Partnership and third-party payment processors, such as banks, credit unions, credit cards, and FinTech services, offer less risk, capital, and risk to jump-start a digital currency payment service. Larger SMEs over $1B in revenue may have internal FinTech groups and leverage services with a sophisticated financial institution, such as JPMorgan or others. Boards and CEOs should consider independent advisory support to right-size costs and risks for their playbook to execution phases.

CEO Regulatory Challenges and Unknowns 

Global revised/new cryptocurrency¬†regulations are SMEs’ biggest challenge and risk. SME CEO Playbooks must understand the evolving digital currency challenges for new GRC controls in playbook planning cycles.

EU, US, and UK regulators are accelerating digital currencies oversight in new compliance, frameworks, and standards this year. SMEs require continuous annual planning, refreshed GRC controls, ESG impact data capture, metrics and reporting, and harvesting of FinTech partners and talent for implementation.

With over¬†$2T¬†in crypto investment losses, there are exposures to significant global systemic risks to financial markets’ liquidity, stability, and investors’ losses. CEOs must track, evaluate, and execute new digital asset regulation compliance as applied to their industry.

Here are essential SME digital currency efforts for monitoring:

  1. The White House Executive Order: Digital Assets Рis a new digital currency board-ranging policy, including CBDCs for roles and clarifying cryptocurrency authorities across government agencies.
  2. No new US financial agencies are or should be in the cryptocurrency space.
  3. National digital currencies/CBDCs become online; they will further collapse many stablecoins and Bitcoin for more recent opportunities in your playbook. 
  4. Blockchain 3.0 technology services in the early-stage SME retail Digital Currencies Playbooks must support¬†ESG¬†for SMEs’ environmental goals, metrics, and reporting for lower resources, energy, and pollution while delivering speed, transactional scalability, and advanced “smart contracts.

Into the Future

Global digital currencies are here to stay and will be faster, cheaper, and safer with liquidity, frameworks, regulations, and transparency.¬†Caution:¬†Each country’s digital currency framework should differ for planning.¬†

‚ÄúThere are still many remaining challenges in determining whether or how to adopt a central bank payment system for the United States,‚ÄĚ – Neha Narula, MIT Director

Many developed nations in 2022, especially the EU and UK, will work through digital currencies frameworks and standards. However, international currencies must have the end goals to be constructed for acceptance, stability, value, and usability for global commerce and citizen use.

Lastly, SMEs must be FinTech and digital currencies ready for the near future since it continues to offer significant ROI for retail-consumer opportunities.

Selected References

Harvard Business Review, Blockchain, “How Digital Currencies Can Help Small Businesses,” Bernstein, Shai and Catalini, Christian, May 25, 2022.

Harvard University, The Harvard Gazette,¬†“Regulators put cryptocurrency in crosshairs,”¬†Kominers, Scott, HBR Economist, September 29, 2021.

SSRN Research Publication, “Distrust or Speculation? The Socioeconomic Drivers of US Cryptocurrency Investments,” Auer,¬†Raphael and Tercero-Lucas, David, September 22, ¬†2021.

Thomas Reuters, Special Report, “Cryptos on¬†the rise 2022 – a complex regulatory future emerges,” Hammond, Susannah: Senior Regulatory Intelligence Expert, April 5, 2022.

Copyright @ 2022, STEVE HAWALD CEO CIO ADVISORY LLC and Board-CXO Research Insights + Vision¬© Newsletter¬©. DISCLAIMER: These articles are entirely the author’s opinion without financial payments and engagements. The peer review was by Tom Austin.

Disclosure

The views and opinions in this analysis are my own and do not represent positions or opinions of The Analyst Syndicate. Read more on the Disclosure Policy.