Accelerating Crypto Adoption: Zuger Kantonalbank and Sygnum Bank

Transcript

is going to be a very exciting fireside chat um because um last October sugar Cana bank has announced its strategic partnership sorry I did not understand was there a question no okay so anyway as I mentioned uh last year in October sugar Cal bank has announced the Strategic partnership with uh with Signum um to become one of the first Swiss Kona Banks to offer digital assets and cryptocurrency services to their clients um and we were all cheering in the crypto value Association Office uh and among uh our ecosystem about the news every single time something like

this comes out we are very excited because this signals to us um that um the rest of the ecosystem and Industry realizes the importance of digital assets and um I have two of the people here who have been instrumental of making this partnership happen um and have been involved with the Strategic DEC decision from uh very early on fris uh who is the chief B2B officer of Signum bank and also Executive Board member and Yan damra uh who is executive board member of the tugar konal bank um Yan let me ask you first what triggered this strategic decision what brought it on um you know you announced in October so it's been five months

since then um how has the whole experience been what were the challenges what is the key takeaway so far yeah I think the the key driver actually was client demand I mean we heard this a lot that that client starts pushing the traditional Banks to offer like services in the crypto space and actually that that happened with sua bank as well so our clients were approaching us and want were asking us to kind of create an offer and we kind of like like felt that they looking for opportunities or ways kind of to to to get what they want and and for that we we set up a project right and and it was like a a journey of 11 month so until we start the starting initiation of the project and then the final launch of of the of the author ring and when you talk

about like the key Milestones or key challenges I mean the first we also heard in the morning already is there was several times mentioned and you have to get the buyin of the key stakeholders like if you are like a bank a TR Traditional Bank and you come with something like crypto assets like you have of concerns like Risk concerns and getting the approval and the buying from the board of directors I guess that's the the most crucial like milestone in the beginning and I I would assume that the most Bank projects in the past have been stopped at this early stage already because of the the board of directors was afraid of of the risk going it and for for us I mean being a Bank located in in souk it helped that we are kind of close to the to the blockchain industry

that we are kind of following the market for years now and that also like our employees and our board of directors they have some some proximity to to the business and so that we we got Beyond this this first point and as second biggest point is then the make a buy decision we also heard this a lot right I mean we want to have like a safe and and simple and um and convenience solution for our customers but we Alo wanted to get like to the market very quickly so have like a reduced time to Market and that's was the decision and to choose an experienced partner like zum um to to build this product um together with us that's all music to my ears and you know the fact that you're listening to your client needs and then you adapt quickly is uh very commendable

do you think that it helped you that the heart of the crypto Val took did it play a little part or do you think if you were located at another part of Switzerland it would still would have been the same yeah I mean it helpes a lot I mean if you the frh Canal bank you can also it's also a big hurdle right I mean because being the first one is always more difficult but then we could make the case that we in the heart of the crypto Valley and kind of we have some proximity to it so this it definitely helped right I mean it's it's more credible than when you have such an offer maybe another bank right and what about the timing why now why not earlier or why not later yeah I mean I mean we kind of started like in in the aftermath of the

FDX crash right where the market was disrupted and even like the pesimist they were thinking like the crypto investing time is over and we on the contrary we saw it as an opportunity because we sense like out the clients are still looking for investment opportunities they were just afraid like a lot about counterparty risk and fraud risk and we thought this is like a great opportunity for us to to step in actually as a Swiss bank right I mean being in Switzerland and being a bank so we started working on the product and hoping that the market would pick up in the meantime and then with a launch in October it was perfect timing I would say yeah as Jerome mentioned earlier um during the panel discussion we somehow always time the crypto value conference events uh just around alltime highs um and I think we're very bullish and

positive about this year and all the years forward hopefully um but yes I think the fact that you have started in a in a bearish year where everybody else was pessimistic um is also very very nice a nice signal to the market um Fritz so Signum was founded in 2018 shortly after you have received your finma license so you're fully regulated and uh B2B banking has always been part of from the very early uh stages has been part of your offering um what was the strategy behind it and do you think does this provide Signum with a competitive Advantage I think it was always part of

the reason to do this because we saw the ultimate conviction in the blockchain and how this drup if this is going to be to the financial world but also to many other aspects of life but the link to the institution was needed to be regulated it needed to be banking great and this is where we said let's not like anyone else build a bank to trade crypto but let's have a tech company with a banking license really a lot of research and development does also go into the tokenization we have a tokenization platform we have a secondly Market uh a Marketplace a regulated Marketplace uh a lot of innovation has going into uh you know making non- bankable assets

bankable such as the first baso tokenized we really believe that this is the the the sort of the the building blocks going forward and I think that and it's been mentioned many times we do have a first class DLT law came into force in 2021 which really gave that regular Comfort to a many banks to actually really Embrace this and we've now come to a point where we have more than 20 banks on boarded uh a lot of them in Switzerland but also in Europe and in Asia and there's more to come that's a beautiful story and you know we are very proud um going abroad when we go abroad to the various events

we're always very proud of Switzerland um in terms of Regulation and how far we are and how how advanced we are and also how local governments are so supportive of blockchain and uh and do their best to accommodate um Partnerships like this or plant the seats for Partnerships like this and many more um for the growth um in terms of big picture do you think uh it affects uh or public perception that you you have B2B Solutions rather than just retail do you think it's it changes I think it it's very complimentary you need to really uh you know we can't access retail we only have

institutional clients and therefore Now with uh the Partnerships we have we already touch on more than three million clients so that means a lot of things we need to have built an infrastructure which wasn't like at the beginning catering for a couple of Trades a day we have now sometimes hundreds if not thousands transactions a day so it needs to be future proof and I really feel it is it it it really complement both sides uh directly on Bard clients as well as the B2B space fantastic so Yan back to you um you know sugar Continental Bank has been around since 1896 so that's a long time in 92 um and you know you have your

traditional offerings like mortgages savings accounts pension um and now you're adding Bitcoin and cryptocurrencies um do you think how does this affect your clients and do you think is this signaling to the market that mass adoption for cryptocurrencies is happening they are here to stay um how are the clients well it was client driven right the the decision yeah I mean at least we think that it's going to stay right I mean that's was the reason why we launch this product I mean we wanted to have the client experience as similar as with trading and and holding a traditional assets so they can

can buy um the cryptocurrencies using the web banking or like Mobile Banking and like in a One-Stop basis so they manage their traditional assets and their crypto assets the same way that was important for us and then from the risk characteristics is also like we we had a strong focus on on on compliance and counterparty risk and that's basically what we did that we Tred to if not redu if not like completely remove but at least reduce the counterparty the fraud risk and the even the risk of losing the keys and with that like making this asset class like similar in the in the risk characteristics to the other asset classes so for that yes I think it's easier now more accessible for our clients to kind of Alo trade in in cryptocurrencies we made this the offering like you mean um most of the

volume still come from the wealth management segments or the the higher higher segments but we see also a lot of activity also from the middle segments or even the retail business very interesting and it is hard to do to provide the same level of experience um for crypto um with efficiencies and of course the the highest security possible um and with the help of Signum you make that happen is it a difficult thing to do well it took us a long time and uh what we are doing today we could not have done even a year ago in terms of the robustness the scale of the business I just touched on the number of

transactions we we process today uh with apis and I think this is really where the learning is uh you need to bring the product directly to the end user uh with our partner Banks most of them now are API enabled that means it's a user experience like an Apple phone easy surface you have everything at the touch of a button and you just add another s class and the clients find it and uh what I find intriguing when we do look at some of the clients when they actually trade they trade at 1:00 in the morning that 3:00 in the morning weekends you really ask yourself do they have a life but they do so that means it is a 247 365 business and this is need

that this is where the C that we need to cater for and we have a lot of discussions with the priv banks and they feel look not necessary because we have few clients large transactions we can do that handh guess what we have had Pride Banks it's hodlers then there's a transaction hodlers not much happened the moment they integrated apis they had transactions many more every day and also what they now realize that in order to cater for that client segment which they Keen to really address like the next gen the nextg that's where you get them they don't want to talk to a client advisor they're self-guided and apis are a must and do you think more complex

products are coming to Cal Banks and traditional Banks you know like defi staking do you think now that we have reached a point where you know okay you're offering digital assets you can invest in Bitcoin um are you planning as the next step to also integrate more complex yes I think I we call it still an MVP so what we did is like the most basic product you can you can bring to Market and we we have a road road map and the based on or based on client demand we will expand the product universe so we we look into staking as as an option obviously like also clients are looking for opportunities to to increase their yield so this is something we are going to look into with together with Signum as

well so that's on the road map yeah absolutely yes I think maybe just to add on that one we always tell our partner Banks the crypto the it's it's the journe is destination map out where you want to take that business long term because that gives you a lot of justification for the business case that also gives you a very good Insight in who to partner with because you want to choose someone who can really be a partner on a long-term Journey the other thing is is important that uh we've seen it every single time a goal life of a bank then all of a sudden the clients say look uh now you finally

come with crypto can I do staking that is as clear as aing in church uh so therefore plan it prepare it because it means that you need to engage in discussion with the regulator fimma you need to amend your or orre Etc do this in time so you can really do the roll out and be the master of your own destiny and the last point we also tell our partner Banks be prepared the moment you go live instead of saying thank you the clients are going to come with all the things you don't have yet so we just went live with u a retail bank and they had a 65 year-old retail mapped grandmother and she asked now your life where can I transfer in my 8 million uh

dollars of equivalent of Bitcoin so expect the unexpected that's wonderful I want a grandma like that please sign me up maybe it's yours yeah I would I won't tell you if it's my grandma actually um so what's next on both sides um what's next on the pipeline I mean we're going to like work on some of the technical limitations we have also like due to our Legacy banking system we heard this a lot in the morning as well right I mean this is really unbelievable that something like fractions and the number of digits is really just such a big big issue are going to work on that a little bit then we're going to expand kind of the product oners by adding some

more currencies so next to follow is going to be the Solana coin in April so this is going to be the next currency and one big issue we still have or not not really um efficiently resolved is the the transfer in um topic for banks right how to get like transfer assets uh assets that are now stored with non-regulated entities and bring them to the bank me there are ways they're like very costly and to find an efficient way to do that that is also something we're looking into and what's next for next for Signal Bank well the world is our Ro therefore we need with maika coming to be uh in Europe not only to broaden our footprint in uh Europe but also to continue servicing our European Banks because we need to have that license uh we can't

just grandfather and therefore continue servicing your partner banks for example bison who is here as well then staking uh we already stake more than four cryptocurrencies so will certainly expand that staking uh Universe we talked a lot about uh tokenization uh We've uh been very active in this one we've just launched the Hamilton Lane tokenization of uh a private market fund because now more and more we do actually bring uh traditional Finance opportunities tokenize it and sell it into the Crypton native uh universe and we also have a presence in the metaverse uh as a bank we certainly

have been tooling around with that one so there's a lot of research and development going into the broader aspects uh of uh of crypto and leveraging the blockchain exciting and I wish we had more time to to to keep talking but we don't first of all I would like to thank you on behalf of the crypto valy ecosystem for being adventurous um and taking on the challenge of implementing digital assets and thank you to signal Bank uh for always innovating and and being the steady partner and the steady leader of the crypto Valley in providing amazing best in-class Services thanks for having us