The answer to the banking crisis is building banks from scratch. Being rebuilt from zero, prepared for new environments, prepared for new economic models, prepared for new P2P networks, prepared for zero cost societies, prepared for freemium models, prepared for new commerce – says Salvador Casquero Algarra, Founding Partner & Co-CEO in 2getherbank, in Bithub.pl’s #SundayInterview.
What are the cardinal sins of traditional banking?
Salvador Casquero Algarra: Among many others, banks biggest mistake was forgetting their primary function: promoting economic activity. They were born to facilitate economic flow (production-distribution-consumption) but they perverted this function when they were allowed to freely create money through:
– finantial intermediation,
– credit creation and
– fractional reserve.
They forgot to keep trust, confidence and client protection as their key obligations. But instead of that, they move their focus, they change their essence towards two other purposes:
– speculative purposes, which is a zero sum game (if I make money someone is loosing it),
– consumption purposes that it is not sustainable as it cannot last forever and it is unfair one as part of the world has more than they need whereas more than a half is missing the basic.
The banks built their profitable business model on one underlying: interest rates and at the same time Central Banks were driving them towards 0 or below zero breaking bank models. As many other times crisis came but this time something was different.
Banking alternatives, called fintechs, starting to emerge as flexible, faster, cheaper, fair options that completely unbundled bank offering. Money issuing was democratized and not “stupid” money, but smart one and not non-backed money, but intrinsic value one: blockchain
Banks cannot compete in this new environment because they have not prepared their culture, their organizations mind for completely new economic models beyond the exhausted capitalism and they have not prepared their infrastructures, their legacy, for a kind of chaotic innovation as it comes from everywhere, from everyone, for everyone: people empowerment.
And to make things worse, banks are completely disconnected from society, from their final clients. Crisis led people to lose confidence on banks, they have their reputation on the floor.
And what are the key solutions you bring to overcome these flaws?
SCA: Building banks from scratch. Huge competition, no other chance: being rebuilt from zero, prepared for new environments, prepared for new economic models, prepared for new P2P networks, prepared for zero cost societies, prepared for freemium models, prepared for new commerce…
Banks did great on capitalist economy but are exhausted and not sustainable anymore, and open source technologies are allowing new economic models: collaborative, sharing, gig, gift, IoT, circular, tokenized, smart economies… and banks are simply not prepared. A “Do It Yourself” trend already seen in other sectors, it’s about empowering people to run their own finances, it’s about using the fintechs products and services to create their own bank. Banks must be a sum of the best pieces, the best modules with people on top of their minds. Think about personalization, think about localization of economies, think about building a bank by the people, with the people, for the people in order to regain trust and confidence.
2gether is the key solution for this banking problem. We are a TRANSITION MODEL that makes feasible this vision, that moves banks from the old banking world to this new future banking, from old technology to new technology, from old economy to new ones… As a lego bank, for a single user, for a particular need, for a specific event, not interest rate driven but contextual product offering, not as a product provider but as a solution finder in a market place to get the best product from all around the world. Blockchain (transactional core 2gETHER, big data (business analytics), artificial intelligence (automatization), machine learning (optimization), natural language processing (user interaction), robo assistant (FLAP 24×7 support)
We duplicate the environment: old banking and ours; we move them in paralell, at the same time, guaranteeing that what happens in one is replicated in the other, in perfect synchrony using trust, guarantee, confidence from the old and building, reinforcing them with the new and when 2gether platform makes the bank confident that the new one works we decouple them making the new one moving alone, building the new models, the new banking on it.
You say you enable various entities (fintechs, banks, insurers) to connect to the platform and present their products directly to the client. So you act as the middleman or do you have an offer of your own?
SCA: We are not interested in interest rates models:
– because we are dreaming for a bank that anyone can use not only those who can pay their money-debt with debt-money,
– because they are already at zero or even below and we don’t think it will go high enough to help all of the incumbents banks and obviously not a new one.
We are not an interest rate bank, in fact we are not a bank at all. We are a technology platform that – like a financial Amazon – is offering third party product. We don`t own products and ever won’t for another reason: unbundling. For every single banking product you may think of, there are lot of fintech or lot of banks doing the same. And the problem for banks is a Spanish saying: “quien mucho abarca poco aprieta”, which means (Google translator is fantastic) “whoever takes a lot of space, the less he tightens up (sic)”.
With such a huge competition, there is always someone who is better than you: a single-product provider, optimized in flows, in resources, in people, with an optimized, dynamic an flexible, business model. We couldn’t be ever the best for a client need, for a client product. And the best is what we want, what we need for our clients. We will look for the best product around the world, not limited in Spain, as we are a global platform with a global mind set. We are building a bridged marketplace, where we connect someone with a need and someone with an offer, all over the world.
You state that recommendations offered to the consumer prioritize what is best for the user. Prioritize based on what? What data do you use to connect entities and consumers and how do you enable those entities to present the right products to the right clients?
SCA: Based on client specific needs, based on specific client profile, based on our product scorecard. We have built a big-data infrastructure so we have a profound knowledge of our customer, we will capture even the most insignificant blinking of the user so we will be able at each moment, at each place what he need, why he needs, when he needs, where he needs, who is the best provider. It will be an event banking, contextual product and after sending all this info, encrypted to our marketplace, we will do an offer curation with an algorithmic scorecard for every product optimized with social or other user recommendations, filtered with provider reputation, completed with product convenience for financial need
What is the role of blockchain in your platform?
SCA: For transactional purposes. We have tokenized every single asset, including FIAT currencies, in our 2getherbank platform using blockchain 1.0 technology for accounting and transaction. Blockchain 2.0 will be used to embed business rules in token definition so they can travel together both the underlying asset value and the business rules. We create also new real-asset backed tokens so clients can manage their economies in a completely different way.
Interview by Przemyslaw Cwik