The Crypto Button Is Here: Creating Seamless Crypto Access in Everyday Banking

Transcript

That's the timer. And you know the beauty of today is that we had a series of panels that touched on so many different topics of life. You know, whether from gaming, whether from like uh you know, from Lily's presentation um about how earning potential um and labor versus capital has changed over the years. Now we're switching a bit again. So we're focusing away from technology um and moving into a bit towards the financial aspect of crypto and blockchain for the next two sessions. Um we have two amazing um fireside chats lined up. Um I don't want to take too much of your time. So Sharz and uh Kraken and Bunk Constantine sorry and

Tom you know I I'm not trying to call you by your company name but of course these are two really really good companies. So, you know, thanks Nikki. Wonderful. All right, Constantine and Tom, let's do this. So, you want to please? Fantastic. All right, the crypto button is here. Uh, exciting exciting times. Um, really looking forward uh to understanding why we have a centralized exchange and a bank uh with us uh to debunk the myth. Uh, pardon me for uh the little pun there. I kind of had to. Um and uh yeah, I mean let's kind of go straight in.

Maybe you just can give a brief intro to what Kraken and Monk is very quickly and then we can get started. Yeah, sure. Um and to yourselves, I think. Absolutely. Yeah, thanks so much. Uh it's good to be back. Um you know, this is like a little reunion every year. I think going from alien tokens to banking is actually um the beauty of crypto. So, thank you uh for for hosting us once more. Um in terms of Kraken I think most people know I would say we're one of the leading exchanges most trusted and you know been around for a very long time. So um for us I would say the biggest shift has been in terms of uh everybody's now really um super active and super interested in not just talking about uh getting into crypto and

uh with let's say banking and retail banks in in in general. um there's now really a lot of profound interest and people are really in action mode versus you know back in 2020 when I started uh talking to uh banks and you know financial services companies everybody was talking about uh very abstract concepts versus now we're really shipping uh my personal background been with Kaken for uh three and a half years and uh prior background is also in uh crypto and investment management and uh got into crypto back in 2016 through um actually a VC expert who is uh shielding the blockchain technology as such. So I think we've come a long way and uh this is definitely testament of how the

industry is evolving and how there's this convergence of finance that everybody's talking about. I think this is exactly uh what's happening today. So yeah, it's exciting. Fantastic. Yeah, excited to hear more about that convergence. Tom, would you like to give a bit of a background about yourself? So, uh, I guess yeah, we're the new kid on the block in terms of crypto conference being a bank that is, uh, coming in talking about what we're doing here. So, uh, for anyone who hasn't heard of us, Bunk is one of the largest neo banks in Europe. Uh, we're focused on building a global bank for people who live, work, and travel around the world.

So for especially people living digital nomad lifestyles and uh one of the problems that those people face is how they can invest and how they can access investment services. Um one of the things that we're doing is building out a really easy way for them to be able to access those. Personally I'm uh the head of new products for Bunk. So anytime we go and build something brand new that's that's what I do. Um and I'm excited to be here today. Fantastic. Yeah. Thank you so much for for giving that uh that context and really yeah happy to to have you here and kind of seeing that tagline of you know bank being the bank for the free. I think it aligns very well with that original ethos of uh cryptoset.

Yeah. And maybe we can we can get some more context here and maybe consent you can kind of start us off a little bit about like how for yourselves you know as being I think one of the most institutionally focused uh centralized exchanges. I mean, you've always been so reputable. If you look at kind of even it's very hard to find even Kraken employees on LinkedIn sometimes uh because of the that cyber security risk and threat that is out there and you're so kind of let's say clean and well structured. Tell us more about this kind of leaning into that uh position and how Yeah. Tell me tell us more about how we've gotten to this point because I do remember a time back in the day where uh it would be very difficult to sit a bank and a crypto exchange next to each

other. Yeah. Yeah. Yeah. AB absolutely. Um I think historically as you said where where we came from is is very different to today and I think security has always been paramount and for us it's not just a feature but it's actually at the core of what we do and we get a lot of credibility because of that. So when people assess their counterparty risk um we're always top of the list. So that's nice but it's also not not not enough right. I think that's just that's the mere starting point. Um, in terms of talking to banks or you know in general this convergence of you know treadf as we call it, we've really come a long way. I remember back in 2020 there was all sorts of abstract concepts being discussed and

serious financial players or banks sort of watching the space but nobody was really that active. I feel like it might be different, you know, with a few select names in, you know, Switzerland, but overall, you know, when I was uh talking to uh banks in in Europe, the narrative was was very different. It was still very early. Now, fast forward, I would say it's a it's a different set. What we typically see is you have these digital asset teams within typically banks who are champions who want to do something and then it's our job to together with these champions uh to make the change happen and to make sure that you know they can get the info in front of the executive committees or you know uh to get the compliance um teams teams

on board. I think the beauty of the setup that we have here is that it's it's very fast. I mean we went to market in 8 weeks I want to say. So that was fantastic. It's something that we can also replicate. Uh the offer is somewhat standardized which allows us to go very fast but at the same time it's flexible enough so that um we can accommodate all wishes and I think that's that's the sweet spot and that's that's the beauty of it. uh in terms of what it is, I mean anybody who has an app really and want to offer uh crypto to to their uh clients, we can make it happen. In terms of, you know, the infrastructure behind it, um the the the custody part, the the trading, everything uh including

licenses, we cover that. The only thing that you need to do is you basically build the front end. And um I think that's also the one key takeaway for you. you know if you have an app um if if you're in banking or you know if it's related you want to offer crypto can make it happen. Um one thing that I would be very much interested in is uh in terms of audience who works for a bank and if not a bank do does a company that you work for have an app just maybe shows okay quite a quite a good mix and do you guys offer crypto already or is this something you're looking at?

looking at it. Okay. Fantastic. Well, then it's a it's a it's a good fit. Yeah. Yeah. Fantastic. Yeah. I mean, and I'd love to come come to that point a little bit more because we we always talk about what is that inflection point. Was there like a critical mass for your yourselves at because it's true. I mean, crypto has always been, let's say, the the the the asset for for all even maybe too much for all when you look at some of the archaic side that that that it that it has. But like at what point were were were yourselves at bank like okay it's become legitimate enough to be acceptable to to us to be able to start offering and to make all of this happen. Yeah it makes sense.

It's our decision-m process when we go and build something is mostly about are we solving a real problem for real people and then can we solve that problem. Those are like really the two things. So in terms of our strategy we're building this global bank. We need to offer all of these financial services to as many people as we can. And we started offering stock trading last year. One of the biggest questions we get on stock trading is when can I buy Bitcoin? Right? Like there's there's this natural demand that exists there. And having a product where you can manage all of your various investments and savings and all of your money in one place is a really attractive proposition to people.

It was something that like probably a couple of years ago was much harder to do in terms of uh actually putting that into a real regulated bank environment. And it's become much easier also partly because of like Mika regulation for example like as a bank we're regulated under you know the banking license laws in the EU. You can have one license you can operate across the whole EU that's becoming more of uh like the standard set and the level just exists there as well. So we can then offer that like all to our users in a kind of a seamless way. It's it's a really nice experience.

But mostly what we see is that there's this big group of users who are interested in investing in crypto, they say like this is something they're willing to explore, but they haven't done that yet. If you look at people who are actually investing in crypto, it's probably not even 15% of people who have actually done it. Even though like at this conference like that might sound wild that the number is so low potentially but there's a big group of people who are just kind of like willing to dip their toes in the water but need a really easy experience and that's where our expertise is. So we're not in uh you know like building a whole exchange infrastructure and building custody and all of that kind of stuff.

It's not our expertise but we can do things that help solve the problems that are stopping these people from investing in cryptocurrency already. And that unlocks a really big market there. The kind of main reasons that people say that they're not investing yet or the main things that are stopping them are like a trust factor. So whether they feel safe while investing it and a knowledge factor. So like you know it's a bit complex and you know they don't know what it is and and potentially they they need to learn about it. And that's the kind of thing that we can really easily do in a in a financial education app. You're in a bank. It's a trusted environment. we can do things that we've learned from our banking experience that help it be even more trusted as well. An example of that is and so we have a

feature in the crypto app. It's called safety shield. And what that does is when you sell your crypto, it delays the payment for 24 hours before you can get your money. To a native crypto person, that might sound like a terrible feature. Like why would you want that? But to someone who is like in that majority of people who are a little bit concerned about security, it's actually an extra layer because the majority of uh like scams we see at that point are not really about hacking. They're more about social engineering. People get called like convinced to transfer their money and then it's gone. having protection against that is is the kind of thing that is needed to uh unlock the those people and uh give them the

ability to dip their toe in the water. Yeah. Yeah, and as you said about, you know, solving real problems, I think one one thing that always stood out is your customers or in general banking customers, they're interested in crypto and although you know it might be, you know, 5% 10% 15% of of the of the wider group essentially you see certain outflows. So you can you can definitely measure it, right? And I think this is also that helps with um aligning internally and you know convincing the board that this is actually something that is not just an idea but that there's real demand because you can see the fiat outflows to all the crypto platforms. So I think a case could be made it's better to have this in-house and to capture the the revenue and you

know to make sure that the user stays on platform. Um and this was also I would say a big a big part of it. Um and uh on top of it, absolutely. I mean, I think in terms of the mindset and how how we think about things, I mean, it's been it's been an absolute pleasure uh working with you guys and you know, speed of execution is something that I think we're both very very proud of and you know, going to market in 8 weeks. I mean, it's uh definitely something that uh where where we have to say that the teams executed well and when people hear it usually um it's a it's it's a big plus and you know, people want to hear more. How is that even possible? Yeah.

So yeah, that's nice. Oh yeah. So let's uh let's hear more. Uh I mean tell us more about uh this. We were discussing a little bit earlier about crypto as a service, right? Can you mention a bit more about Kraken embed? I mean I think that's something that you've been working on quite a bit as well, right? Yeah. Yeah. So um in in general way we organized with uh within Kraken Institution is that obviously we have the um existing u client segments with you know trading firms bread and butter business and intermediaries such as uh banks and we've been servicing B2B and by extension B2B T2C for a very long time but now really is the time that um it's there's there's so much demand there's so much real interest that we

said okay we're going to take a a deep dive and see what else we can do. Uh in terms of Kraken embed, it's just a fully um scalable solution that allows you uh to offer crypto to your clients. So let's say you're a bank, you can come to us um basically connect through API and your clients uh can u buy and sell crypto uh on your own in your own platform. will help you with everything around the whole tech stack um security um the the licensing part and also everything around how to even get organized both from a uh tech standpoint but also in you know very let's say very pragmatical pragmatic terms what the

setup should look like and as mentioned before I think the beauty of the solution is that is it is standardized so we can go fast but it allows for an incredible amount also of flexibility so we looked into certain markets where we want to go First, um, yes, you can basically access, uh, you know, hundreds and hundreds of of coins, but if you wanted to, you could also limit this. Um, you can also customize uh the your offering around, you know, who does the KYC, is it uh, you know, open loop or closed loop uh, in terms of, uh, do you want to be able to send crypto or not.

Um, so there's a lot of flexibility, but everything is embedded into this product that is actually standardized and and can scale, which allows us to go super fast. And um, in a way that's also the the the culture and the the the idea of the of the ethos uh, around it because just selling a solution that is 100% standardized and, you know, doesn't work for our customers, that's also not something that that we want to do. Yeah. And I mean, you know, it's always good to be a little bit controversial as well. I mean, of course, that sounds great for Kraken and but and of course in the short term for banks and of course for for yourself uh it's probably a great way to get your first toe in in the short term. Now, how how do you see

this relationship maturing as well in the mid to long term, right? Because there is this element where you become to a certain extent then dependent as well on Kraken. How how do you see that the symbiosis that partnership the relationship growing as well over time when crypto digital assets are more of a norm than they are today? I mean not to put any spice kind of on the panel but just kind of to understand okay uh how can this really work on the long term as well? Do do you have a thought on on that Tom? Yeah I think that what we do with that will depend on how the product develops and how people use it and how the whole crypto industry develops. I think because if it becomes part of the payment traffic for example then that

will be something that all banks will need to go and support just as they do any other kind of payment method that kind of thing. So currently what we're seeing is that there's it's very early days for the number of people who are even just willing to like go and invest in crypto at the start and we're we're have quite a big opportunity just in accessing the people that are interested in dipping their toes in. That's quite a quite a big market to grow. What happens beyond that I think is very dependent on what happens in the crypto industry in general. Okay. Yeah. Yeah, I mean the way we look at it is uh very similar in a sense that as you said it's the people tipping their toes into crypto and um you know the let's say cryptonative uh

experienced trader who has you know seven accounts, seven exchange accounts, I think that's that's a very different play. Um but you know if you want to stay in your trusted banking app and uh you want to hold some bitcoin because you know it makes sense to diversify and potentially catch some upside. I think this is um a very good example of um an area where we're not competing but actually 100% complementing each each other. Yeah, I see. And and maybe just to to understand that further because I think a lot of the audience in the room are are users of Kraken and you've delivered a very high service offering over the past, you know, decade. Um what what are you looking to do um as a centralized exchange that is kind of

becoming a financial institution? what are you looking to do in that medium and long-term kind of horizon uh to to maintain that kind of market share that you have today and to kind of remain you know as resilient as you have is are there kind of areas in your road map of development or just kind of in that ethos that you're looking to kind of continue to kind of yeah still kind of be a market leader yeah I think a partnerships just like uh the one here that we're discussing um and really understanding what it is that our clients want So we look at segments and then subsegments and do a real deep dive where we yeah meet meet up with uh our clients and really understand what it is

that they need and I think this is a direct result of it where we just understood that there's a real need in the market and some of the conversations uh that we're having uh basically lead to new partnerships to us developing new products and I think for this audience today I mean the the the message uh is clear Kraken is absolutely uh open for business we're quite flexible and I have to say you Um we're also shipping you know if you look at let's say the the the pace and you know all the announcements in general it's uh it's it's an absolute privilege uh in terms of I think what's most relevant for for the audience today though is definitely the B2B T2C space and and the offering I think uh crypto is 100% going mainstream and there is this convergence of you know Trefy with crypto and I think

couple of years um down the road maybe people won't even think about their financial controls their finances in in in these terms or in these uh segments, right? Um it's really converging and maybe people don't even want to know sort of what's what's under the hood. It has to be everything has to be super convenient. It just has to work and uh we've we've come come a long way and I think in terms of adoption, this is also what's what's required. I think this is also the biggest part probably um to go from you know just citing the numbers that you gave us the 15% to go from 15 to I don't know 100 I think it's a lot of it is about convenience.

Yep. Although not compromising on, you know, security and all all the core values that we have. But no, indeed. But it just needs to be uh as easy as buying anything else is effectively. That's what uh most consumers expect. Um and that's that's the way it's actually going to reach the masses. Wow. Fantastic. I think it's a great way to wrap up a fireside chat here. I think we have 4 seconds for 0 seconds. One one question, half a question, no questions. very fast. Maybe there are no questions. Okay, there is one question, please.

Yes, there you go. It's a great and quick question. Fantastic. Thank you. All right, let's give a round of applause to our audience. Thank you so much.