The first fully digital bank based on the decentralized ledger technology — blockchain — is now being created in Estonia. This new and unique financial institution is going to offer not only traditional bank services but also to interconnect the world of traditional finance and cryptocurrency start-ups.
As Ivan Turygin, the co-founder of Polybius told TASS journalist in the interview, he and his colleagues got the idea of a new bank after being involved in cryptocurrency business for four years. “At some point while visiting various blockchain (a distributed ledger technology which is a base for cryptocurrencies. — TASS) conferences we noticed that the audience is quite diverse and includes bankers, investors. Lots of them were curious how and where to use blockchain.”
Soon such organizations as National Bank of Lithuania and First Credit Bureau of Kazakhstan started to approach them with questions regarding blockchain. “And we started to think: what if we could build a modern bank using blockchain as one of the technologies? All document management and intrabank transactions might be done using blockchain because this technology allows to store the data securely and to confirm its integrity with fewer expenses. Banks like that don’t exist yet.” — Ivan says.
They also used blockchain to raise funds. “During our ICO crowdfunding people were purchasing special Polybius Tokens. Tokens allow us to pay dividends via so called smart-contract system” — he explains.
In the process of fundraising, Polybius project developers were consulted by experienced international bankers from countries like Switzerland. In a month the project raised 31 million USD which is enough to create a bank.
What can a blockchain-bank do?
Successful fundraising creates plenty of opportunities for further development, project creators say. One of the possibilities is to apply for an EMI license that allows the institution to start its banking activities on a tight schedule. In 2018 Polybius plans to start offering traditional banking services, such as accounts, loans, credit cards, once the license in one of the EU countries is secured. Furthermore, Ivan is confident that usage of blockchain might reduce expenses by half gaining an advantage over other financial institutions.
Polybius’ second strength comes from the project developers’ experience in cryptocurrency business. “Our goal is to become, as we call it, a crypto-friendly bank. There is a lot of startups which are related to blockchain and cryptocurrencies. Although when these young entrepreneurs try to open an account in a traditional bank, they usually get rejected. Banks’ risk management departments do not really want to deal with cryptocurrencies. On the contrary, we are in the loop; therefore we are ready to open them accounts and help with their projects, for example by financing them” — says Ivan.
He believes that the potential of this market segment is huge. “Economy of cryptocurrencies grows in an unpredictable and uncontrolled way. In the latest year and a half, total capitalization of all cryptocurrencies has enormously risen: from 5,5 bln USD in January 2015 to more than 83 bln USD today. The annual rate of growth is three-digit” — Ivan explains.
For now, there are no plans for the bank to work with cryptocurrencies directly as it is illegal due to EU laws. But people in Polybius believe it won’t hurt the workflow. “Our primary mining business has already brought us more than 700,000 users from all over the world (including Russian Federation and CIS member states). We are going to offer our bank services to those people. Just as they trust us and our mining service, so they are going to trust Polybius” — Ivan supposes.
Blockchain for the future
Blockchain and cryptocurrencies are changing our reality, and the establishment of digital banks is only one example of those changes, Polybius’ founders think. “Traditional paper registries are digitized. The blockchain is enormously popular because of its ability to store data cheap and safe.” — Ivan states.
Polybius founders are going to contribute to the development of digital bureaucracy by introducing the Digital Pass solution to the EU. “Estonian national identity card allows citizens to access their personal data, bank accounts or national registries quickly and easily. One can also vote online using such a card. Our idea is to introduce an upgraded eID solution to the EU, employing some cryptocurrency-featured technologies.” — Ivan says.
Each Polybius user will get a Digital Pass and therefore an option to provide access to encrypted data, such as credit and insurance history and potentially — medical and education records, land ownership and much more. “Imagine you’re skiing in the Alps and God forbid you to hurt your arm or leg. You get to a Swiss hospital and neither the doctor speaks English nor you speak German. But with the Digital Pass in place, hospital staff should be able to get all the required medical information anyway.” — he explains.
Blockchain perspectives in Russia
Ivan believes Russia will not be left behind of this dynamic blockchain development. “There is a lot of talented people in Russia, and they might play a significant role in the development of digital technologies. Would you take a look at the biggest blockchain and cryptocurrency market insiders, you’ll definitely notice some Russian or Ukrainian names there.” — he says.
“After the St. Petersburg International Economic Forum a lot of our Russian partners and buyers started addressing us. Many of them were eager to utilize fresh blockchain development programs that appeared in some regions with the government’s help. They intend to open some innovative technoparks — it seems blockchain was given the green light in Russia.” — Ivan considers
The interview has been conducted by TASS Latvia representative Evgeny Antonov