Mt. Pelerin’s Arnaud Salomon on democratizing investment banking

0:00I'm Ashlyn Addison from event chain for investmentpitch media and FinTech news network and today on blockchain interviews we have Arnaud Salim on the CEO of mount Pelerin welcome the show Arnaud it's a pleasure to have you on today thank you you're very welcome let's talk about Mount Pellerin now your team is creating a bank for the new economy what does

0:25that really mean yeah so I mean we're creating a digital investment bank here in G which is slightly different in the way we want to operate and contribute the business right so it's a full wizard first of all is the full reserve type of bank we want to conduct the business in the form of marketplace where basically the bank is not the sole Kentucky for each and every

0:47product might modify it consume and of course we'll have register blocking technology for tokenization and we bring the entire balance sheet of the bank on chain in the form of small contracts you'll see it's it's interesting Wow so will users have access to traditional banking services as well or how does it specifically differentiate is it none of those regular services or

1:11a hybrid mix no no it's gonna be like a very traditional type of bank we're not building the crypto bank per se right so we're really building a traditional digital bank online and if you are and people will have access to 30 different account in 30 different currencies of courses can be multi currency from day one you would have dedicated eye bands

1:32for each of those currencies we'd have a master event occurring pretty much any currency and that was the application to the survey bites off like a single muster point for you to pay in consume and debit the proper account depending on where you are so sure burning it would be to your account if you're London that would be the parent account etc so it's a very traditional type of

1:53bank account person now of course we will enrich the ecosystem was different marketplaces where you can buy and consume different type of products banking for us mm-hmm very interesting and what kind of banking products will you be using yeah so basically the first of course different once you answer currency exchange loans etc but we will of course offer

2:19investment products on top and we will offer the opportunity for pretty much any SME to comment leverage the tokenization to raise money or to sell their equity or bonds directly to the to the public interesting now I've read a little bit about Mount pellerin and I saw that you guys are focused on the democratization of investment banking can you explain a little bit about how

2:45the Investment Banking is evolving towards democratization and how does that affect business moving forward yeah yeah I mean if you look at it today so most of the products that you can buy and trade on the stock exchange or reserve – it's a high level bankers investment bankers traders etc the idea of soft organization is that once your bank you can actually back to back you

3:09know you can incorporate those products into tokens that pretty much anyone can buy a fraction of five dollars or five euros and that's really an opportunity for anyone to participate in this economy but as well as having an impact locally right so I mean you would have a cursor that you can try right so depending on if you have a local impact or a global impact and I mean look at it

3:33if you love the bits area down there you know wait you it's almost twice a week there and somehow they want to open a new one across the street or anywhere we are to see well you will have the opportunity to participate with I don't know $50.00 $100.00 etc because he would be able to crack on through the tokenization of executi and get directly his customers to participate in his

4:00adventure interesting and do you see traditional banks adopting this movement towards democratization or offering some of these different types of services or with Mount Pelerin as you guys have really started from from scratch with these new models incorporated is it that much easier and will the traditional you know competitors be easily able to compete with the services that you're

4:23offering yeah of course I mean this is a right so there is a general trend here and we clearly see at least here in Geneva that a lot of banks actually want to get into this movement so they contact us in order for to develop new product new offers the thing is that when you start with a legacy you never really changed completely so the idea is

4:51not for them to actually have new offers at new services on the side rather than radically changing their business model I believe that we will see more and more competition going towards that simply because that's what people want mm-hmm and can you speak a little bit about your full reserve banking and the difference between full reserve and fractional reserve banking for the

5:17end-users sure yeah so basically full reserve it means what it means right so it means that we will never ever risk people's money we will never know now two peoples deposit to someone else will never reinvest it on the market or gamble it on the market will refuse to ourself to leverage the balance sheet of the bank and therefore we will never ever be subject to bank fraud and that's

5:42very important if hundred percent of the clients wants the money back at the same time we should be able to date to deliver it right I mean most people believe that the crisis of 2008 is over but the reality if you actually look at it how did we solve it we didn't we what we did is that we lower down the interest rate and to repay the previous dance and we created new one and now the

6:04bubble is growing way bigger than it used to be in 2008 and you know when when when things will go bad at some point we want to be like pretty much the only bank that is not impacted at all because we're not invested on the market that's very important because people now are actually buying themself what they want to buy meaning that they buy too risky if they invest into this sorry

6:28that was much before I mean they take the risk of buying equity into it and of course they get the elevator and whatever investment probably at least they know what kind of risk they are taking if they want to remain free liquid on their bank account they know that there is absolutely zero risk for them mm-hmm very well and are there other democratized investment banks that are

6:51popping up in Switzerland or in the surrounding areas and how do you deal with that competition no I mean today we see we don't see that many banks popping up there general trend is pretty much the opposite but most similar consolidation of banks see give people the regulatory cost is quite high and if you don't have the sufficient I said that the management is becoming hard to

7:16actually survive in the blockchain world of course where there is two other project in Switzerland to create banks it's called 7 Signum competition is great it means that invalidates actually the market we believe it is healthy were slightly different in in the philosophy I mean of course we're not again in the crypto bank would be able to leverage the blockchain technology to xx entire

7:41balance sheet or chain so that's a very different way of approaching it and you're not a crypto bank but you're trying to bring bounces on chain now can you talk a little bit about the blockchain part of that and if there are cryptocurrency services as well yeah sure so basically of course we start with the liability side of the balance right so the people's deposit you wrote

8:05the torah the swiss franc etc etc every time you deposit a thousand yuan to the bank account what we do is that we issue on chain a thousand euro in the form of yours 20 token those tokens are obviously in a wallet that is controlled by the bank yeah so that anyone can use it even your mother but now when you will be at the point to make a payment out you would have two options either

8:28you pay to the legacy payment route Swift step out ACH in the US etc etc in this case will redeem unchain the tokens we deliver the money to the correspondent bank to pay you beneficiary but you would also have the options to pay to an address rather than an iPad and therefore the token will move from the water is controlled by the back to wherever it is controlled

8:48by you here we have like a compliance aspect to that also we created something that rich protocol in order to make sure that compliance is always enforced even though it's not chained in the form of soccer but that's for me for the liability side and on the asset side of the balance if this is where it's becoming super interesting because banking assets all banking assets or

9:10comforts and what we do is that we incorporate those contracts into smart contracts and we automate few of its functions the cash flow structure and the ownership structure so I mean if you want an example loan loan is a contractual agreement right that you have between you and the bank it's an asset for the bank of course it yells because I mean if you're motivated by

9:33interest but it's a very illiquid asset for the back yeah so that means that if they want to sell it to some other banks they can well you as a customer you don't change counterparty that means they have to stay in the loop every month you know when they continue connecting on your site so it's becoming costly for them to actually issue such a product on the

9:51market if they won't be sweet single never move a single load so of course they a little bit bigger product etc etc but now if you replace that with a small conference you as a customer you been back to me transferred and paying back type and every month that doesn't change anything and then it can really be answered the ownership can move it can be back aimed on thank you and because

10:12it's represented by token it can also be collectively owned by the crowd a fraction of interesting and because you've involved these smart contracts and as well are doing a full reserve banking model the bank isn't able to make money on that money that they're holding or maybe not as much is that a problem for the business model you really have to shift the business model

10:36from traditional banks who used to make money on fractional reserve banking to now a new model so what does the business model look like for you guys now yeah yeah you're totally right so that's really the core of what we do so we are not a credit based businessman in the business model that is credit based we are on the commission based business model meaning that we offer marketplaces

10:59and where we act as a market market maker of course but at the end of the day our role is more like to be the broker that is actually consolidating all the office of the market and if we take the example of Tulum this is really the simple example here you as a customer you absolutely do not care if you loan is provided by Bank of America or Lending Club right which we care is that all

11:23your criteria so much and that you get a zero and what we do here is exactly that we aggregate the offer of the market and we systematize it on the market place and whatever comes on top is always the best deal free but again those marketplaces are open that means that if you're still unhappy with what she's being proposed you can create your own deal and let the other members subscribe

11:43in two ways and that's really you know if you look at it more as what Lending Club is doing yeah so we actually aggregate all the offer but as well as the opportunity for anyone to create the audio and at the end of the day there are happy people are happy listing because of course little bit to yield that they have at the back of the watch and when they invested type of assets

12:04but there is one big drawback which is of course liquidity there is no secondary market when you participate in crowdfunded loan platforms you're lost in your investment opportunity and matures now with tokens you instantly have on the second day that we organized with for some pretty good independent but also anywhere else you will automatically have a secondary mortgage

12:30for you to participate in potentially to cash out if you need your money back you make another investment very interesting now security tokenization has been a huge topic moving forward how much is mount Pellerin involved in security tokenization and have you done a security token offering yourself or have coins integrated into the platform yeah yeah this is a part of the bank yeah so

12:58the entire Bank is going to be in the form of meaning that we had to actually come up with a framework that would work in terms of compliance for the regulator's right so the idea was to be able to retrofit all the existing containment regulatory rules into the blockchain with a simple rule engine so we have a list of rules engine and the user registry and the

13:23combination of all that allows actually pretty much everything yeah so really it's it's extremely simple to restrict the transferability based on different factors so it could be for example near an accredited investor and but this product is only for accredited investors in Europe who have rules such as mid feed as well so we need to make sure that your risk profile you needed that

13:46you can buy any product that will adapt it to the risk profile etc except from this rule engine allows exactly that to restrict the transferability of different tokenized assets based on a set of rules yeah and that's really what what we do and of course in order to prove that with last year we didn't test you but a very specific one so the idea for us was really to bring certainty to

14:14you and some kind of protection some kind of level of protection for the investor because at the end of the day we look at it those stos the way you're structured today most of them though structured in the form of private construction equipment yeah so they will share with you stash future cash flow in branch through some kind of consultative voting right that kind of thing but at

14:35the end of the day is just a private contractual agreement and you know that much protected because if you we probably those contracts at the end there is always this little line that says that at some point in time we can replicate this contract and do something different so what we really wanted to do here is to incorporate the share of a company into tokens and to make the

14:55token holder being a shareholder and that is actually very important because that's what we achieved that now o our token holders Oracle is there for the protected iceweasel and are bounded by your private contractual agreement it's amazing are not great work on the project so far now are you guys looking for investors more developers or more partners and how can they get ahold of

15:19your company yeah so we are of course in the recruiting phase this is the biggest thing for startups I guess you're not finding the right balance that fits within the team so of course we are always looking to higher level people we're also in the fundraising we will store it's a very significant raising but that would be completely private we would not involve the proud sir of

15:43course we need to capitalize the bank properly according to FEMA slap it and for that we will find strategic partners to work with us amazing and how can they learn more about no pellerin well they can learn more by just going on our website subscribe to a newsletter and they can even contact us anytime awesome thank you so much for your time Arnaud Salomon that's all the time that

16:08we have today but all the best on your project sounds like you guys are well on your way to success and I wish you good luck moving forward so thank you so much for your time thank you for having me