The Future of Blockchain and Payments

Wade Erickson (00:00):

Hi. Welcome to another episode of Tech Leaders Unplugged. We're getting unplugged today with Neil Ambikar of Narvi Payments. He's the co-founder and CFO, and we're going to talk about virtual banking. We're going to talk about blockchain, we're going to talk about FinTech and the future of FinTech. And, Neil’s going to share his expertise on launching a business, to help companies with what, back when Satoshi put this together, back with Bitcoin, the purpose was to use currencies to pay for things. So, you know, thank you for not just supporting the speculative market of what cryptocurrency has kind of become, but this is really why I got interested in blockchain years and years ago, was really about using it as a form of payment and barter and those kinds of things versus speculation and, you know, holding crypto. So, you know, thank you for that because we need more folks like you for sure. Uso Neil, let's just jump into who you are, a little bit about Narvi Payments, and then we could jump into the topic, if that's okay.

Neil Ambikar (01:20):

Perfect. First of all, thanks for having me here. Love being here. So yeah, so my name is Neil. I'm one of the founders of Narvi Payments. So this is not my first FinTech. I've done maybe three or four. And if you include like, the different products I've developed, that's probably 15 from virtual banking services to like a crypto gateway, something similar to Stripe. So I've been in the space for 10 years seeing it evolve as it has. And Narvi is my, let's say, the latest startup. It's, I would say it's like a iteration and building up on all my experience over the years. And what we are doing at Narvi is we are building a neobank, which is purely focused on business account. So we try to get as close to the source. So when people, a company comes to us, we can give them a bank account we can give them crypto services all in the same application. We can give them access to multicurrency accounts, swift cards, so, you know, they can do both their fiat banking and crypto banking all in the, all in the same place.

Wade Erickson (02:26):

That's great because so much of this is disparate systems that you do try to set up a traditional bank account, but then it maybe ha doesn't have ties well into the crypto. And, and, you know I've, I've watched some of your previous presentations about the cost for foreign companies to, to two transactions. So maybe we could talk a little bit about, you know, really what's the driver of this is, is businesses already have tight margins, and then when you throw these kind of just to clear the payment so that you can use it in the fiat model of your own, you know, can be quite expensive. So yeah. So let's talk a bit about one, how you differ a little bit from the other approaches that are out there. And then you know, what kind, kind of the, you know, what brought you to this as a model and was there a certain event in your life or did you just see the, the gaps out there? Tell me a little bit about how this, this new company came about.

Neil Ambikar (03:26):

Okay, that sounds good. Let, let's start with the like the start, how I got started. I mean, one thing I always say when people approach me is like, Hey, you know, where did you get this idea from? And one, one thing I always like to say, like, to be honest, the idea doesn't matter because I know like 99.9% things more now than I did when I first started. And the product that we are building now, it has nothing to do with the with the, with the challenges or the concept I had at the start. Because once you get into the product market fit phase, you realize that people want something else than you than you realize. But the way I got started was you know, like 7, 8, 10 years ago, FinTech was really, really young. There was hardly anything like there was very few people doing new banking or like, you know, EALs and things like that. And I, especially as a person, I've lived in like 10, 15 different countries, you know, I always thought there was such a big challenge for businesses when it comes to, you know, doing business overseas, especially with the Swift network. Like you would have like Asian exporters, let's say invoicing clients in Europe, and the payment would maybe take a month with all the compliance and and not to mention all the FX costs, which are like four, 5% at the time. And, and the initial concept was very simple, Hey, why don't we just create virtual accounts which we can give to people in different countries so they can access local banking and not, and skip this whole international banking swift network. And that was where the original idea came. What we soon found out that people didn't just want to do fx they wanted business banking, they wanted better quality business banking where they could hold money, they could do currencies, they could do payments, they could just have a better digital experience. So we end up focusing more on the the digital banking side than just money remittance or fx.

Wade Erickson (05:22):

So obviously this the, the feature set for what you're doing here, you said you went to 10 or 15 countries, so obviously you had experience in some of the, the challenges in each of these local markets, whether it be the, the currency, the inflation, all the things that affect different countries differently with their currency. But tell me a little bit about how crypto, you know, 'cause here in the US lots of challenges. We probably should bring this up too. You're in Europe, you had a lot of ties to, to Nordic banking, which is now becoming kind of a, a bit of a leader in the use of crypto in a traditional sense. Maybe share a little bit about how the Norway angle came in and how the Europe piece is going in and, and maybe some of the pressures you're feeling from regulatory bodies.

Neil Ambikar (06:12):

I mean, let's say crypto is a, the good thing about the European Union, though you might hear a lot of bad things about it, is that because there's different countries, they can be different laws, unlike the US where you have like one law. So crypto has been a little bit ahead of the US because you, we have had a lot of national regulators providing what we call vast licenses, like virtual asset licenses. So there has been more innovation in Europe than I, than in the us. I mean, in the, of course you have some of the big players like, you know, Coinbase, Kraken, but there's been a lot of different types of assets being created in a regulated manner in Europe. But I would say that most banks, they might talk about blank blockchain, but they're still very negative when it comes to real use cases. Like we have so many clients who come to us, which is that, hey, we do have a, a bank account with one of the large banks. I won't name any, but we want to open an account with you because we are too afraid that if we withdraw funds in crypto or get funds from Kraken, they will shut down our account. So they're using us because hey, we are, we are crypto friendly, we are not going to freak out just because you get a transaction from Kraken. It, it's, it's a little bit crazy. So I would say that the, it isn't that crypto friendly yet, but I think more and more the regulators see that, that it is, that it's not that different than making international payments. So I'll give you an example. Like currently we are doing integration with the SWIFT network, which is, which runs pretty much all the international payments globally. All cross, I would say like 90% of cross border payments are happening on Swift. And it's crazy, like hardly anyone even in the banking sector knows how to use it like you, 'cause it's, it's built like 50 years ago. So the people who implemented it, they're not even here. Like when you ask simple questions like, Hey, what is the difference between this type of swift and this type of other Swift no one knows and these payments are still taking, you know, days if not weeks to clear with a lot of compliance. And then when you sort of just see the efficiency of the blockchain that, hey, you, when you, when you send a blockchain transaction, when you get that confirmation on the blockchain, you have the money without any dispute within say, three to 10 minutes. That's a, that's still a big game changer for businesses. And a lot of our businesses that we have, we actually encourage them that, hey, you know, know what, rather than getting a swift or sending a swift, which is going to take a lot of time, it's actually very expensive and there is a good chance, chance that the payment might get rejected. It might get stuck because of compliance. If you have the option, just send USDT or USDC or Bitcoin because that's done in a few minutes versus maybe we are stuck for a week. So we are still, I think the most of the majority of banks don't see crypto as a good thing. They still see it's mainly being used for money laundering or something like that. But when, when people, businesses use both, they just say, ah, you know what? I'm going to use crypto instead of Swift because I really need the money in let's say Brazil or the US now, not in a week's time or two weeks time. So we are seeing a shift more from small businesses who are willing to use crypto rather than from the large banking sector players.

Wade Erickson (09:33):

So, so tell me a little bit, okay, so you've set up their business bank account and then you ha you're crypto friendly. So does that mean you, you obviously you, it doesn't sound like you created your own exchange, you're leveraging the existing exchanges out there and what they're doing is you're what, focusing on the end points. So if you need money in Europe, you can trade into the blockchain, whether it's like you said USD cryptos or bitcoins and then now you've moved it over the blockchain to this, to the, your home country, and then you use the same crypto exchange now to flip it back to the local currency through another exchange, or how does that work between, because I'm still trying to follow the tie with the bank accounts and the crypto exchanges and, and how you're moving the money. What, what's the transportation layer?

Neil Ambikar (10:26):

Yeah, so what we are doing different is, so we are not trying to be like the USDT or we are not trying to be Coinbase or a crypto, like, hey, we are going to solve like ripple, the, the, we are going to be a competitive swift. What we are trying to do is we're trying to solve real world problems for businesses. So like, and a lot of the challenges, and unfortunately 90% of challenges in banking and where it comes to fiat and crypto is still regulation. So firstly, we are regulated one license below a bank. So we can pretty much do everything a bank can do without, except for lending. So for example, if you're a customer of Narvi, you get an IBAN account a bank account number from us with a Narvi, big Swift code. So you get that to receive and send your payments, and soon also like 15 different currencies. So you, you have like the, let's say the rails directly connected into the fiat world, which whether it's a CH payments, swift payments and what we call <inaudible> Euro payments in Europe. On top of that, we are also regulated as a crypto exchange, but we don't see that as our main use case. So we are not trying to compete with Kraken, and we are not trying to compete with Coinbase, but it's like, hey, now we are connecting the, the crypto rails to also your fiat accounts. So let's say that you have a, you as a business have a hundred thousand Euros sitting in your account right now, and you're like, Hey, do you know what? I don't want to send this as US dollar to the us I need to send this as crypto to Brazil or to the US. You can just change it pretty much instantly in our platform and send it that way rather than sort of moving it to exchange, having more compliance problems and moving it that way. So we are trying to bridge I wouldn't say we are trying to, we are definitely not reinventing the wheel. We are just like, Hey, we are going to give the tools between the fiat world and the crypto world, so that can move more smoothly. Like if you are just doing crypto to crypto, there are amazing projects out there, whether it's exchanges or you know, Binance or Coinbase or meta Wallet. But if you are in that, hey, we want to do traditional banking plus a bit of crypto then we are sort of the, the person who can help small businesses out.

Wade Erickson (12:49):

And so what, what countries, you said 15 currencies, so I'm, I'm interested, what, what countries right now are you able to open bank accounts for folks? Is it primarily Europe or is there other countries that you can actually open that?

Neil Ambikar (13:03):

Yeah, so currently when so we can, we can onboard people, companies from pretty much all over the world as long as they come, let's say from a low risk jurisdiction. And they're not sanctioned majority, I'd say 80 to 90% of our clients are European companies. But we, we can onboard US companies or, you know, companies from you know, Singapore, Australia and New Zealand. That's not an issue. And now if they become a client, they do get a Euro account. So it's a Euro Iban account. Currently it's connected to Swift and the next sorry to which is like the Euro system soon on the same bank account, they can receive and send up to 15 different currencies. So they can receive US dollars using the same account, send us dollars using the same account. And we are also connecting to some new banking providers that we can actually make outbound payments in say, 75 different currencies. So a business can choose with us, Hey, I have an employee in Philippines, they can pay in Philippines, Beso they can pay in US dollar, or they can, okay, you know, I can also pay in crypto. So we are giving them all the channels they would need to run their business whether it's in Europe or globally. So that's, that's our goal is to, hey, provide all the different payment channels a normal business would need to run a modern business.

Wade Erickson (14:24):

And so, so you're saying companies in, in the us with all the regulations we have and stuff don't have a problem, then we can, we can set them up with you. And now, so does the, the bank show up as your bank or is it because I've seen in pre previous presentations you had some big banks that you were working with in some of the previous payment models, but is this your bank now?

Neil Ambikar (14:50):

Yep, exactly. So that's one of the good things of being regulated. So when, when a customer gets a bank account, the SWIFT code will show NV payments. So it's similar to like when you have an account, let's say with JP Morgan, you have the account number, and then in the big code it says JP Morgan. So that's the good thing about having our own regulation is that we can actually get very close to the source of the payment rails, whether it's the, the swift rails, the A CH rails, the, the local sapar rails and the different payment rails. 'cause That's what one of the good things of having a license is you can actually connect directly to a lot of the banking systems. And that brings a lot of efficiency. It's also on the product development side.

Wade Erickson (15:33):

And then how does, so does the, the bank live in Europe or like, 'cause we obviously have things in the US where the government likes to keep its eyes on your bank accounts. How does that work for a US company? As far as the IRS being able to.

Neil Ambikar (15:51):

Yeah, I mean, look, we, we follow all the rules. So so we don't, we don't actively recruit US companies, but if they come to us, like a lot of Europeans have companies in the us they, they sometimes want to work with the European provider like us vice versa. Or they have like a US company which is looking to expand to Europe. So they want some local rails. But we are factor compliance. So that's one of the things we do is we, we are factor compliance. I don't know if most people probably don't know what FACTA is, but it means at the end of the year we have to send a report to the US government with all, all clients, which are say US related, whether it's US companies or even if you are a US citizen, which owns a company in Europe, we will send information. And we also obviously do that in Europe. So that's so if you're looking to avoid, get around some of the rules unfortunately we cannot help there 'cause we are fully like sharing the data that the US government requires of us.

Wade Erickson (16:50):

Yeah, yeah. Not trying to get around it. I just don't, you know, don't want the IRS coming after me saying you got foreign accounts that you're not reporting on. So well, great. So so tell me a little bit, you know, time is already flying, right? We're, we're, we're, we're 10 minutes in to, to the top of the hour. But tell me a little bit about how the scalability is. I mean, obviously the banking system is huge, you know, millions and millions of transactions probably a minute. And then you have your jumping between currencies and cryptos and all that stuff. Tell me about the scalability and, and are you using the standard blockchains for, like, do you insert into the normal Bitcoin blockchain or Ethereums, or how does that work to be able to scale your operations?

Neil Ambikar (17:43):

I'll, to be honest, scaling in FinTech is really, really hard. You know, like regulation plays a huge, a huge role. Compliance plays a huge role. I'll give you an example. Like in Europe we have these things called instant payments. Technically the payment should be cleared in less than one second, but I can guarantee it sometimes takes days to clear these payments because the banks are doing additional checks, they're blocking payments. So unfortunately this is a big challenge in the FinTech space is how do you scale without breaching rules. And, and that's a, that's a big challenge that I don't think anyone is able to really solve, but you just have to do the best you can. And we are doing it in three ways. So on the technology side, what we are trying to do is we are, we are trying to get as close to the source as possible. So when it comes to, for example, swift, we are, we're directly integrated with Swift with the local Euro payments, we are directly integrated there. So we can, we don't have layers of banks sitting in between. When it, when it comes to the blockchain, actually now you can actually use a ledger or a treasure to secure your Narvi account. We are one of the first few fintech’s in Europe, which instead of, for example, using your Google Authenticator, you can actually secure your transactions using your ledger or treasure. So we are trying to get as close to close to the base of the infrastructure as possible. So that brings us a lot of efficiency and we are trying to do the same thing when it comes to compliance, a compliance, it's really impossible to not have manual things. But you know, like after spending 10 years, you sort of try to the best you can. Okay, how can we onboard a customer with the least friction possible? So we, we try to do it that, hey, when a person makes an application to open a company, it takes 10 minutes. You know, most banks will take hours to complete sending PDFs. And that as is fully digital. Same thing when it comes to like, if you're doing like millions of euros of transactions, we try to like make this process really efficient that hey, we need some additional information, can you provide it? So it is a big challenge. And what we focus on is, yeah, get close to the source of the technology and focus on like really good user experience. So even though it's painful you know, you can actually, like, they're like, Hey, this is still better than the other bank. So we do get a lot of comment, Hey, this is the easiest onboarding we have done because we have tried to think about everything to minimize the annoyance that people feel when they work with a bank.

Wade Erickson (20:21):

You know, one thing I also think about too is a lot of these exchanges, you know, you go and you buy your crypto and you're really trading on a proxy account, and all of those accounts are really stored in a master blockchain account. And that's where a lot of the stuff has come from. And the failures of a lot of these exchanges is because you are putting the trust, you might think you have a bank account like you do when you go to your local bank, and it's FDI, she c insured, and no one can take money out of it and all that kind of stuff. But a lot of these exchanges, the way they're trading into the blockchain is through proxy kind of accounts, right? So in your case, if I actually hold money in Bitcoin, do I actually have my own blockchain address that my crypto is stored on? So there is no intermediary, like a lot of these exchanges?

Neil Ambikar (21:13):

Yeah, I mean that's a, that's a really good question and point. Like so the, the yes, you know, like each person gets their own wallet, but that's just for routing, you know, and that's what now big exchanges also do. But one of the things I try to also educate our users, like if you've been in the block blockchain space for five, six years, you probably, I mean, I've definitely lost money because of hacks. Luckily not a ton of money. It's really easy to lose money and the, the hacks are so sophisticated, the, the phishing attacks and things like that. And the big difference with fiat, as you said, is that once the money, the, the, the Bitcoin or whatever is gone, it's gone. You cannot recover it with, with banking, actually there is a hack. There is a, there is a chance that we can contact the counterparty bank and try to recover it. So there's two things we are doing on this sta this point is that for businesses, like most of our businesses are not really you know, they're not like crypto savvy, so we're like, Hey, you know, hold your money in euros. So we hold it in fiat in your accounts and just use crypto or convert it to crypto when you need to make a payment. So, hey, I need to, you know, pay 30,000 in, let's say Philippines, just convert the Euro amount then and there and move it to the Philippines or Singapore. You know, don't hold it because you are, the, the risk increase is holding crypto if you're not, if you don't know a lot about this. And most people who are getting into crypto, they don't know much about security and things like that. So that's one thing we try to educate. And the second thing is that again, we think, and I, and I think maybe you also think that is that the most secure place to hold your crypto is hardware wallet. So we already implemented that. Hey, you can, you know, do secure your Narvi account with treasure, treasure, treasure or a ledger or any other. You know, the, the security standard there is the feco security standard. So hey, you get, let's say use NV to collect the crypto or convert it, pull it to your own hardware wallet. That's the, that's the most secure thing you can have, there's no reason to trust us or anyone else. So that's what we focus on. And unfortunately, the large exchanges don't do that because it's not in their business interest. Their interest is that you hold the crypto on the exchange. And also trade it there. While we are, we are using it, we are, the use case for us is about using it as a payments rail rather than trading in it. So we are trying to like, Hey, you know, be secure when you're moving crypto or holding crypto rather than, Hey, do a lot of trades on rv, because that's not our main use case.

Wade Erickson (23:57):

Well, believe it or not, we're already at the top of the hour. This went quick. I, I really enjoyed this conversation because I think what you're doing you know, I started playing around and looking at blockchain man, probably 20, 10, 11 years ago. And my, my, you know, being a business person, my interest was really around, you know, using it as what it was meant as a currency for people in different countries and all of these kinds of things with, you know Forex and all those kind of things to, to, to alleviate a lot of those challenges. But we hear about all of the, the, the speculative use and storage, which is not, that's just like having a bank account, but you never use the cash in it. You know, the point is, is to be able to use, use and trade that and, and, and open this up, and you're, you know, one of the few that's actually making this happen for businesses and individuals now. Right? So right now you're primarily business focused, not consumer focused, but you have a plan maybe in the future to think about a consumer model.

Neil Ambikar (25:02):

Yep. The, you know one of the things about Narvi is we are fully self-funded. And the re the main reason why we focus on businesses is just about, hey, there's a certain amount of clients we want to manage right now, retail clients, it's, it's a huge, you know, it's like you need another a hundred people to help with support the, the crazy questions. So that's, it's only been a strategic reason, but we do open let's say a lot of the directors of our companies hold also private account with us. So, but yeah, it's, once we have, maybe it is something a lot of people in our team are thinking about is, Hey, how can we launch something, a retail product, but which is not too cumbersome in terms of support and managing where it becomes like a big beast, like a Coinbase or something like that, right? So that's, we do have plans, but yeah, it's about who's the right retail customer when they have so many options. And that's the, that's the main thing.

Wade Erickson (25:58):

And, and I think a lot of the retail customers, they're not worried about all these different forex currency things. I mean, yeah, exactly. I'm buying 99.999% of my life is around the dollars of my country that I live in. So, yeah, you know this, again, but businesses have a very different model, import export, which is the, obviously the target. So real quick, I wanted to introduce our guest for next week before we wrap up, if that's okay. So next week we've got an exciting guest. It's going to be Steve Orin, the federal CTO and senior PE at Intel. One of the big guests we've had on our show. We've had some great guests, and it's nice to have Intel on the show. It's going to be May 8th at again, nine 30 Pacific time. So Wednesday please join us for our conversation with Steve as we talk a bit about the, the topic at hand over there. So again, Neil, thank you so much for sharing this.

Neil Ambikar (26:57):

Thanks a lot for having me.

Wade Erickson (26:58):

I'm actually thinking about going and looking at opening an account just to, to, to be a part of that have a business that not that I'm going to be taking a lot of international stuff, but it would be nice to have the Bitcoin options and the crypto and actually use it the way I've always wanted to use it, which is to buy things and trade on it. So, any closing remarks before we wrap up?

Neil Ambikar (27:23):

No, it was, it was great. Thanks for having me. And yeah, I mean it's, it's, I'm happy to share things around the crypto and fiat world, which doesn't get a lot of the real use cases, unfortunately, don't get a lot of let's say media attention ex apart from the price of Bitcoin and what new is being launched in the altcoin world or Dogecoin. So thanks a lot.

Wade Erickson (27:43):

Well, wherever Satoshi's at, I'm sure he is proud because that's, you're doing what he wanted. Right? Thank you. Alright, have a good day. And see next week, who's watching Byebye.

Neil Ambikar (27:53):

Cheers. Bye.