In conversation 24.10.2021
Setting the standards: Behind the latest launch of BVNK, Jesse Hemson-Struthers, BVNK
Can you summarise the rationale behind the latest launch and the problem that BVNK is solving?
Headquartered in London, BVNK aims to set new standards for digital asset financial services from its European base.
In a world of low interest yields and outdated infrastructure, digital assets are rapidly increasing in appeal. We saw a clear appetite among mid-market enterprises for financial services rooted in the world of cryptocurrencies. It will take time, however, before mainstream banks incorporate digital assets. Meanwhile, existing crypto platforms only serve the extreme ends of the customer spectrum – that is, either small-scale retail customers or multi-million dollar institutional clients. BVNK aims to plug that gap in the mid-market and become the ‘go to’ choice among fast-growth international businesses and partners for digital asset financial services.
What is the opportunity for cryptocurrency in the corporate market? How do you see the market and use-cases developing?
Digital assets are a technological breakthrough that makes it possible to structure financial services and transactions in new, more efficient ways. They present the promise of instant, decentralised, cross-border exchange with low fees. That  potential for innovation has already been applied to core banking, eliminating bottlenecks and the inefficiencies of legacy structure. The intrinsic benefits of blockchain and digital assets are serving as a catalyst for businesses to rethink their capital management. For businesses with global footprints, international payments and settlement are being transformed – executing faster at lower costs – by services using digital assets as a vehicle for cross-border foreign exchange. We’re seeing widespread adoption of these services, particularly in emerging markets where the fiat banking infrastructure presents more obstacles.
Digital asset lending markets are now running in parallel to the fiat economy, and are well on their way to becoming an established part of global financial systems. In a traditional finance world of low interest rates, businesses see that digital asset markets offer an attractive alternative with higher yields.
There’s also the wider macro-economic perspective to consider. In response to the pandemic, developed economies injected vast amounts of financial stimulus into the system to protect jobs and keep businesses afloat. A fifth of all the US dollars ever issued were created last year. In this environment, as fiat currencies are effectively devalued, investors have sought refuge in alternative asset classes, including bitcoin and other cryptocurrencies. Businesses such as Tesla and Square have incorporated digital assets into their portfolios. There will be more and more corporations with large positions in digital assets and not enough service providers with treasury solutions that incorporate digital assets.
What technology lies behind BVNK and how does this integrate with existing corporate systems?
BVNK is one of the first providers to bring digital asset treasury and payment solutions together for businesses and partners. The drivers of our product innovation reflect our corporate values of transparency, accessibility and advocacy. Using the BVNK Business Account, our clients have access to GBP/EUR/USD and digital asset wallets. Business clients can manage settlement, exchange and payment from a single account interface, reducing the burden of managing multiple vendors and suppliers.
With BVNK Yield, one of our flagship launch products, clients can put their capital to work and earn interest. It’s tailored to corporates seeking more transparency than traditional loan services and gives them full visibility of the factors that influence risk and reward. BVNK Yield deploys client funds to multiple prime brokers based on a dynamic risk model – which takes into account security, creditworthiness and risk profiles – to optimise yields on a regular cycle. We believe that regular reporting on counterparties and exposure is as important as the returns themselves.
What headwinds does cryptocurrency face in the corporate market?
A lack of understanding and dedicated service providers that can tailor services for the corporate sector remain the key obstacles to adoption. Until now, using cryptocurrency financial services has required an in-depth knowledge of the space and technical expertise. BVNK transforms this experience, making it more accessible so that non-experts can enjoy the benefits of digital asset-based financial management.
Other factors include questions around regulation – which we are looking to play our part in resolving – and the immaturity of risk management towards crypto in general.
How has the existing business and team evolved to develop the BVNK proposition, alongside Coindirect and Wiredirect?
The founding team of BVNK previously managed Coindirect, an emerging market crypto payment platform launched in 2017. While operating Coindirect (as an emerging market focused retail and business offering), the team saw increasing demand in developed markets (UK, EU, etc.) from global businesses, family offices and investment firms who were looking for crypto-based financial services. The team saw that this would quickly become a significant opportunity and the idea of BVNK was born.
Coindirect and BVNK will operate as separate, standalone entities with different businesses serving very different audiences. The focus for BVNK will be on innovating product features and its platform technology infrastructure, acquiring operating licences from the relevant authorities, and developing a robust partnership model to successfully onboard financial service providers lacking in crypto expertise; while Coindirect will be positioned as a product partner continuing to developing the crypto payment sales pipeline in emerging markets.
Where do you predict that BVNK will be in five years’ time?
In the last decade, a series of challenger banks have emerged to offer an alternative to established providers. Their success in rapid customer acquisition and growth indicates the extent to which traditional banking services were falling short for today’s customers. In reality however, these neo-banks have changed very little about the banking experience as they were still built on top of the outmoded, pre-digital banking infrastructure that serves all providers. What we’re seeing now in the cryptocurrency sector is innovation based around a rethink of how blockchain and digital assets could transform core banking.
With that in mind, we believe BVNK will establish itself as a powerful alternative to conventional business banking platforms – one that successfully bridges the gap between fiat currencies and digital assets.