Finally there’s a blockchain-focused bank.
Or at least that’s set to happen thanks to entrepreneur, Daniel Spier, who founded Initium after his own difficulties getting basic banking services while operating in the often-scorned part of the fintech sector.
Banks notorious for their conservative bent, have taken a particularly scritinizing lens to blockchain-based companies that banks see as a potential threat to their core operations. “So why help Blockchain?,” they ponder.
Entrepreneur Daniel Spier took that question to task in 2019 when, in Zurich, Switzerland he announced the launch of Initium, a bank that plans to cater almost exclusively to blockchain-based companies. BlockTelegraph had an opportunity to speak with Spier at length at Initium’s press launch in February. Our interview follows.
Jordan French: In all the corners of the tech sector one might think financial technology — or FinTech — as it’s called, would have the least difficulty opening a bank account. But that’s not the case, at least according to Daniel Spier CEO of Initium, who has some exciting news.
Daniel, I do thank you for spending some time with media today. Let’s get this out of the out the gate. You have some news — especially for the fintech sector which has been hurting from a banking services standpoint. What do you bring to the table with Initium?
Daniel Spier: We want to be a player in the market which really understands what’s going on. We have a luxury that we can use we can start off from fresh. We’ve got no legacy system, we can take solutions that are out there and really choose the best solutions to be able to service this market. We really understand the sector and can build specific tools that will service and unsolved what these companies need and we’re building it into our DNA so as a new organization it makes it much easier to service these companies.
As soon as you approach or a soon as someone approaches a bank with something that is not normal the easiest approach is to say no, as opposed to really digging down into detail, understanding what these businesses are doing and I had the same experience but, hopefully, we’ll be able to solve that for people going forwards.
JF: We’re all puzzled. Can you explain why there would be such reticence? Why traditional banks are generally avoiding servicing FinTech companies?
DS: I think there’s a couple of reasons behind it. I think there’s probably three key reasons behind it. Number one, they don’t understand the risks involved, they just don’t understand the business. And if you don’t understand something as a bank, as a compliance department, it’s easier to say no thank you.
I think number two also comes down to technology where these organizations they’ve got legacy systems they’ve been around for generations, old systems, legislation is so tough to keep up with technology to support current endeavors to think about a new industry it’s just a major undertaking.
And the third reason, I think some of these banks are competitors to the clients that want to bank with them, and I understand it. Why should they assist a direct competitor? So, the reason is probably these three reasons combined and many more.
JF: Certainly, it sounds like you’re among the first to enter this market. Now that you’re opening a bank requires money, I would presume. Tell us how that all works as not many people can just open a bank. Explain what that process looks like and how much you’ll be raising.
DS: So, it’s it’s a big step. We’re actually looking to raise a total of 275 million Swiss francs. We’re doing this in three stages. The first stage will be 50 million. We’re doing a combination of private placements, institutional investors and in June we want to run an STO, a security token offering, where we’ll be raising the balance. So, I’m very happy that we’ll raise the first round, which is the seed capital to get us going and that will help us fund the STO and all the fundraising efforts that were undertaking at the moment.
JF: Why an STO?
DS: The beauty by doing a STO, by marketing an STO and telling people about this STO is that a lot of the people that follow this news, will become our clients. So, number one, will try to get potential investors but at the same time we’re attracting clients. So, it just works hand-in-hand and by taking a more modern approach, I also feel the mix of funding works very nicely with the client mix that we’re getting. So hopefully people who will be investing us through the STO will not just be investing in us but also in the economy overall that will grow and support companies operating in this economy.
JF: It sounds like a lot of your investors are likely to become your clients as well?
DS: I’m hopeful about it. I mean I’ve got through my background but a lot of contacts, I know a lot of firms that are struggling but I do expect that some of the investors will become clients in due course and themselves clients who know other companies that struggle. So, on the client side I am less worried because I know people are crying out for solutions.
JF: For those who want to know, when will this actually launch? When will you be open for business so that all these FinTech companies that aren’t being banked can find a reliable banking partner?
DS: Obviously, you’ve got a long way to go. We’ve got a lot of work ahead of us. But our aim is in Q1 2020 to launch our first license which were hoping would be in Liechtenstein. Liechtenstein is just up the road here from Switzerland where we are in Zurich and Liechtenstein, being a member of the European Economic Area, gives us the whole reach across Europe or the European Economic Area so that’s the first country and then we expect every six months another jurisdiction to go live after Liechtenstein we want Switzerland them to go live, then the UK, then we’ve got Singapore and Israel, also in our pipeline.
JF: Roughly how big is this market that you’re attempting to tackle?
DS: It’s very hard to put its precise number because what does it include but what we are considering the new digital economy. I mean the blockchain itself which is part of that companies are valued at over a 100 billion dollars and that is now in the “crypto winter” were they were worth multiple of that. The overall sector, what we call the new digital economy, the revenues are in excess of 100 billion, so it’s a massive, massive market that it’s growing at a tremendous pace. So, let’s look out a bit into the future…
JF: What’s your broader vision here? Do you anticipate any changes in the banking sector at large?
DS: The banking sector is enormous and for them this is probably still tiny, bearing in mind the size of the market. I do think that in a few years the traditional banks will let’s say wake up I realized that they are ignoring a massive sector. Yes, they can build it at that time. It will take them time to build, to reach a stage that, in those few years, we would have reached.
I do think the traditional banks will have to change because what we’re calling the new digital economy at the pace the way it’s growing, it’s just going to become ‘the economy’ and I think people will start reacting differently to this but I think we’ll have a head start by what we’re starting today.
JF: What are some of the things that FinTech companies can do, pre-launch, to get involved and see Initium succeed?
DS: So, definitely the funding is in the area and we’re already done in a questionnaire where we’ve got a lot of feedback from the players and ultimately, I want this also to be a bank for the new digital economy. So, I welcome feedback and it is actually directions and areas that people need because we’re building this for the industry. So, funding is a big one. Obviously without the funding, the bank is not going to happen. That’s definitely a very big one. But early signs show that they want to become customers, even though we’re talking about 12 months away and just giving us general feedbacks of the services that they need, so just to make sure to continue proving that we are on the right track to provide the services this customers need.