Jason Blick on EQIBank’s digital banking and DeFi services

0:01i'm ashton addison from event chain for investmentpitch media in the crypto coin show and today on blockchain interviews we have jason blick the ceo of eqi bank jason welcome to the show and thank you so much for taking the time to be here today thanks ashton it's a pleasure i'm really excited to dive into eqi bank as a digital bank i know you're doing some really innovative

0:22stuff and i would love for you to just kick it off with a little bit of your background in your journey and how that led up to getting involved with starting eqi thanks ashton so i qualified as a british solicitor many years ago long time ago now and quickly moved into financial services so i started to run my own bank in 2006. um and have run a series of financial

0:45institutions since then that have rapidly scaled and have usually done extremely well so more recently we formed equibank in 2015 with an unbelievable team with about 300 years experience of running some of the major big banks around the world wow that's uh that's awesome and now as the first uh one of the first digital banks you're really trying to

1:09switch up the traditional financial industry adding in more blockchain and even decentralized finance and i want to go into those details but could you start with just a high-level overview of of equibank so we started ecu bank in 2015 and we have one specific objective to become the world's first global digital bank there are some other digital banks out there and

1:33some great banks as well that focus on the retail market but we have the objective to provide digital banking services to 180 countries around the world and because we have such an experienced team we were very familiar with some of the problems and legacy issues facing the big banks and many not been addressed definitely and i wanted to touch on that

1:55and i know that you know there there might there's a lot of issues in traditional financial uh industry that still need to be solved but maybe you could touch on what some of the main issues that you saw uh that you were looking to pinpoint and solve uh when you first started echibank so yes the the the banking industry has a series of legacy problems

2:17uh and in our industry in the crypto fintech space um we usually find banks reluctant to even deal with us um so that's been a huge problem we only saw a couple of weeks ago hsbc highlight that they were going to close accounts if clients were purchasing coin-based public stock so not crypto the actual publicly traded stock so that shows you the disconnect

2:40particularly in our industry and that filters through all the way through these monolithic uh traditional big banks old legacy technology that often goes back to the 1980s and cobalt many carry a lot of risk on their balance sheet in that sense we for example azeki bank we syndicate our loans to make sure we have the very best stress test ratio many big banks

3:02obviously have massive overheads they have all of these branches they have all of this real estate and they have really expensive cash handling services and the question is really whether a lot of this is necessary especially if you're a global business client and then of course everybody makes mention of too many fees and how complex big banks are to deal with especially if

3:24you're in an innovative industry or you have interests in a variety of countries so these are problems that were really worth solving definitely a lot of great points there jason and yeah that is you know the ability to um have such a lightweight infrastructure and i was looking at some of these cryptocurrency exchanges versus some of the traditional banks

3:47they seem to have 10 or less of the employees and the profit margins are higher and actually making more profit than the banks just because of all this legacy infrastructure that they have had to have built up upon upon the past decades and decades do you see that as one of the competitive advantages in being a digital bank in that you know you've started with newer technology and you're

4:10able to service more globally and with the increased globalization not having to have all of that overhead uh that the banks have and being able to provide services you know for cheaper because you don't have to pay overhead costs you're absolutely right if you look at some of the big banks and it's best we don't name them but some of the bigger banks have cost to

4:30income ratios exceeding 80 and in some instances 90 so the actual cost of running these massive monolithic structures is extremely difficult and who's paying for that we're paying for that ashton that's filtered through in fees etc they're also in a very difficult position many of these big banks look at their i.t spend look at the footprint they have from technology

4:53and it is literally an impossible job to recreate all of that architecture so we did things a little differently um ekibank is designed to replace the need for multiple complex relationships so we have a functionality enabling clients to bank with us exchange crypto borrow money have custody services for treasuries bonds and crypto uh do wealth management asset management

5:19etc all in one place and because we're digital only our cost to income ratio is just a fraction of those big banks and as a result of that we're able to pass on those cost savings to our clients across 180 countries around the world so we have more coverage than any other digital bank right now and that's also reflected on our onboarding as well sometimes it's very

5:41difficult to open an account with a big bank lots of paperwork lots of explanations about what you're doing and if they don't understand the industry it can be a 60 70 day onboarding process even if you can onboard in the first instance vereke bank we decided that was a major problem from the beginning and we have digital onboarding with facial recognition etc

6:02so clients can onboard anywhere in the world 24×7 and have really fast onboarding great transparent fees i often joke ashton in essence we're a global financial super services supermarket um and we hope to meet all of our clients needs just in one ecosystem definitely and that's that's great to hear jason thank you for those points and one of the uh the factors

6:26that i was looking into at keybank is that there's this banking as a service you know baas which is quite interesting and makes me think of you know democratizing more access to these kind of banking services can you just talk about that banking as a service is that how big is that in the role of ekibank and does that just allow any other you know regulated players to help

6:48grow this ecosystem outwards absolutely so for many people they feel as if working with their bank is a very much a one-way street you you park your money with the bank the bank uses it to lend to other people etc you obviously recover your money out of when you need it but you don't fundamentally profit from that relationship and it's quite unusual

7:09in that regard now so we started banking as a service uh in 2020 it was an unbelievable success and basically what it means is a client can white label our bank license our technology our platform our correspondence and provide financial services in their brand to their clients so we've already delivered that to a host of clients who have managed to

7:33get enormous scale and drive new lines of revenue so many of these guys may have a large client based telco airline crypto exchange so they're obviously always looking for ways to drive new lines of business and new revenue if you can have banking on top of that you've got the captive audience you've got a fantastic digital bank that's going to let you let you white label

7:54their products and services it really is a phenomenal way to drive new revenue and partner with a bank for the first time probably ever very cool and you mentioned you know having democratized access to this banking as a service you're you're actually already servicing 180 countries which is incredible can you talk about the the licensing the regulatory environment

8:19having different jurisdictions and did ecu bank have to go through a lot of hurdles to to get this global access so the regulatory position for any financial services company is always complex and for a bank even more so so on average there are about 200 to 500 applications every year for a banking license in our jurisdiction and only two have been approved in the

8:43last couple of years it usually takes four to five years to to build out a banking infrastructure get the necessary licenses work with the correspondence etc and basically there's two forms of license in the banking world you can take an onshore license for example in the united states or in the uk or in europe and focus on that domestic client base

9:05or you can secure a global often referred to as an offshore license which enables you to provide coverage across the world but does have some restrictions in terms of how you can market and on-board clients in a in a national environment but one of the things our clients constantly say is that they don't want the complex nature of having five or six relationships with national

9:29banks they may have an operation in the us in south america and in the uk and japan and they're often dealing with multiple banks across multiple jurisdictions creating at the very least a lot of paperwork so working with a global bank means that you only need one relationship for all of the countries in which you operate or seek to operate so that's one of the distinct advantages

9:51with our with our global approach in our global license definitely and i think that's the right approach especially just with the globalization and and banking the unbanked and getting people that you know are in underdeveloped worlds and underbanked countries to get access to this digital bank so uh i'm really liking uh this and i'm excited to see how it plays out

10:14as these uh as you know defy and just the decentralized finance world just continues to grow and merge into what will be the new uh finance so and i was looking into eckybank's um recent work and i saw that you've recently closed a 12.5 million dollar fundraising uh so congratulations on that first of all um that's amazing and now with that raise closed

10:41what are the next steps for you and your team in in executing so again because of the custom income ratios of a digital bank you can do a great deal with very little and and clients and investors prefer and like that so we already have a phenomenal app and banking system etc but we're really getting ready for massive scale we already have demand probably carrying

11:05us through until the early part of next year as we sit here today so we're launching a new call banking system an amazing new app which enables you to go from crypto to normal fiat currencies and then to credit cards to loans to asset management to otc on one app which is phenomenal we are looking at moving onshore as well to provide additional coverage and

11:26additional services to some of our onshore clients and we're moving forward with the launch of our own crypto exchange platform so that's uh tremendously exciting we are i think the only uh bank in the world that's actually moving in that direction uh and i think it's going to be an amazing addition to the to the uh to the active and growing um crypto community

11:46so in addition to that raise we also did a phenomenal raise in the d5 space which has given rise to an altogether new audience for the bank yeah that's really exciting and i didn't know you were developing a cryptocurrency exchange i'm really excited to see how how that comes to fruition but i was researching into the decentralized finance route that that

12:07equity bank is taking with defy because that has just exploded throughout 2020 you know over 30 to 40 times multiples of the amount of capital that's being locked into these decentralized protocols and the future of decentralized exchanges and trading can you talk about the strategy that you took within the d5 route and you know what kind of services you're

12:27looking to provide or how you're looking to expand within d5 we started to look at d5 for three years ago and then more solidly around two years ago um we're a huge proponent of the defy industry we believe it's an amazing way to democratize finance and democratize banking frankly across the world but many people have been a bit concerned about d5 especially uh institutions wealth

12:50managers family offices etc because first of all they don't understand it and in many instances a lot of the platforms are not licensed or regulated so we have a d5 platform that is powered by a licensed and regulated bank which people are tremendously excited about and we're launching four products uh in in june and the four products are an uh an interest rate uh swap product a

13:12derivative product designed to really disrupt the uh the 500 trillion dollar industry around that derivative product set and we also have some great lending products allowing our clients to lend and borrow amongst themselves so they can do fixed term products fixed rate products variable rate products and we have a yield aggregator which basically enables clients to get

13:35uh to get a stakeholder in that really interesting farming environment so we are the first bank to power a d5 platform it's been an unbelievable success and we're a big big advocate of uh continuing to invest in that sector and support that sector definitely that's really exciting and i think it's a great route and because it is still even though it's grown

13:57exponentially in the last year it is still so early on and there's just so many more millions and upon millions of people to be onboarded into the ecosystem so i'm looking forward to seeing how ecu bank grows out and takes the next steps and you know as you continue to grow what are some of the challenges that you foresee having to overcome to get to more

14:19widespread adoption and to grow to these tens of millions or hundreds of millions of customers well we expect to have about a billion aun by the end of the year and one of the major issues to constantly monitor is obviously compliance banks and sensible defy organizations are really just large compliance organizations that constantly have to ensure compliance with kyc aml

14:46and obviously underlying banking registration and legislation so what we're looking for in the defy space specifically is certainty there has to be a raft of new legislation especially from the eu and the us which enables us to scale this incredible sector with the certainty of legislation and regulation behind it of course there are a series of countries that are providing sandboxes

15:10for this space and some boxes have a part to play but beyond that we need absolute solidity we need guidance we need guidelines and that's going to really drive capital markets and public monies into d5 at the end of the day a decent d5 platform can provide anything north of five to ten percent uh return on an annual basis on stable coins whereas traditional banks are obviously

15:34only able to offer between zero and two percent and if it's on if it's on the euro it's a negative interest rate so it's naive for banks not to consider d5 as a very viable solution to continue to not only protect their client base but further their profitability and further their ability to pass on discounts and positive returns for their client base

15:55so that's one of the major challenges making sure that the regulatory environment is fit for purpose um and that in itself will drive an entirely new fintech and banking industry which as you say has grown exponentially if you if we really look at it it's grown five thousand percent market cap over the last 12 months uh and the user numbers are continuing

16:15to grow extraordinarily on a daily basis definitely and i completely agree uh the the way that it's developed and the return difference between traditional finance and especially with the euros as you mentioned uh is is significant for these players to not be looking at this and figuring out how to integrate it into traditional finance but i think that

16:38your digital bank's definitely going to have a leg up with without having that overhead in the infrastructure and i'm excited to see uh throughout the rest of 2021 and beyond how quickly uh more new entrants come into the space and i'm looking forward to seeing how the uh the d5 ecosystem expands within ecubank as well and for the viewers that are looking to learn more

16:59about uh you know the the services that ecubank has as a digital bank and also just the d5 part and and to get involved with uh the communities what's the best way for them to learn more uh people are very welcome to reach out to us uh at www.eckybank.com which is obviously the core banking uh structure and people can onboard and can get used to what we do and provide etc

17:23anywhere in the world and for our d5 platform it's www.ekify.com and you'll get a great understanding of the products and services we can provide clients in the d5 community and both those structures are interlinked so people can move between the d5 community and the traditional banking community in a really seamless way which we feel is truly unique definitely and i'm that's

17:47great to hear and thank you so much for that jason i will leave those links in the description box below for the viewers all the best with eckybank moving forward i will be watching as the d5 ecosystem grows and echibank's part in it continues to grow and let's follow up in the near future ashland thank you