Retail bank integrates bitcoin service

Founded by a group of U.S. Army officers in 1922, the United Services Automobile Association (USAA) now has over 23,400 employees in offices throughout the country, and assets of over US$70 Billion in 2015.

The Fortune 500 diversified financial services group of companies offers banking, investing, financial advice, and insurance products, and is currently the sixth largest provider of auto insurance in the US, with over five percent of the national market share.

Full membership was only available to enlisted officers in the armed forces until 1996, although financial products like life and home insurance had been marketed to the public for decades. After 1996, the group opened up to active military, former military, their families, and cadets or midshipmen.

USAA had 10.7 million customers, spread across 19 major markets, by the end of 2014. The only physical branch is in the group's hometown, San Antonio, Texas. Banking is primarily done online through USAA Federal Savings Bank, which has a convenient Mobile App where members can send money, get proof of insurance, pay bills, and deposit checks.

The financial services group is privately-run, which has served it well over the years. Since there are no shareholders, a percentage of profits are returned to the members directly, in the form of an annual dividend. USAA members get an annual disbursement check based on the previous years profit.

The USAA regularly scores the among the highest on customer satisfaction surveys and service ratings for financial services companies. JD Power and associates awarded USAA with its Chairman's Award, the first ever in the financial services arena to earn that distinction, and a survey by Zogby International ranked them number one out of 145 American companies in customer service.

The group's structure also allows them to experiment with new ideas. Checks can be deposited by taking a picture of them with your smartphone, a service pioneered by the group in 2011. USAA is also known for inventing the concept of direct phone marketing in the 1960's, over a decade before they offered any banking services.

USAA Account SummaryFollowing a four month pilot program, USAA members can now view the balance of their Coinbase account, alongside the rest of their USAA accounts and financial services.

The financial services group made a major investment in Coinbase, during the US$75 million Series C fundraising round in January 2015, alongside The New York Stock Exchange and BBVA Ventures.

In order for USAA customers to add their Coinbase account, they only need to go to their accounts summary page, add the account, and sign into Coinbase. From there onwards, Coinbase wallet and vault balances will show up inside of their USAA online and mobile accounts, underneath the “My Accounts Summary” page.

After viewing their Coinbase balances, there is also the ability to monitor transactions inside each wallet and vault. Just like any other non-USAA bank account that you can view from the Accounts Summary area, your access to Coinbase funds is “view only,” at least for now.

Jon Cholak, the lead investment associate for USAA’s Corporate Development team, was a key part of the integration. A bitcoin users and researcher of cryptocurrencies since 2014, he helped with the coinbase investment, and is part of the team that integrated their wallets into the USAA service offering.  

- Jon Cholak, USAA


“What we’re developing is at the forefront of the financial services industries,” Cholak claims. Co-worker and senior information security analyst Carl Mehner added, “It’s pretty neat to see my bitcoin balance immediately when I log on.”

Brad Smith, managing director at Cornerstone Advisors, described the USAA as an early adopter and leader in innovation, following the launch of the pilot program in November. "A whole lot of traditional banks watch what USAA does because most of their bets have been right," he told American Banker.

- Brad Smith, Cornerstone Advisors


From bitcoin's earliest origins, users have speculated about how banks would react to bitcoin becoming a widely-accepted currency, or mainstream financial asset of some kind. Some guessed that banks would attempt to destroy bitcoin, while others claimed it would be the banks that would perish. In 2012, Bitcoin guru and author of the bestselling 'Mastering Bitcoin' Andreas Antonopoulus rose to industry-wide fame, spreading ideas around such as how banks would one day embrace bitcoin.

- Andreas Antonopoulus


Some might argue that Antonopoulos was already proven correct when banks all over the world began testing and using blockchains in their businesses, a trend seen at an increasing rate lately. Nick Tomaino, business development manager at Coinbase, pointed out that it's rare for banks to be implementing Bitcoin services, in an interview with American Banker: "There have been a lot of banks interested publicly in blockchain technology but it's not clear what they mean by that."

- Nick Tomaino, Coinbase


It would seem that the program is off to a good start. Over 11,000 USAA customers already have accounts with Coinbase, integrated with USAA accounts, according to the bank's announcement on Monday.