The emergence of disruptive technologies has created new business models in various industries. The financial industry – among others – has been experiencing a vigorous shake up in recent years, with the digital assets space continuously reinventing how we interact with, and perceive value. New fintech firms, often find themselves locked out of traditional banking structures for various reasons. Enter Arival Bank, to address these companies’ unique needs.
The brainchild of Vladislav Solodkiy, and Igor Pesin (both heavily decorated fintech investors under their Singapore based investment imprint, Life.SREDA), Arival Bank was founded in late 2017 after the pair, along with the Life.SREDA team released their findings from a study conducted over a period of 3 months on why fintech firms – especially in digital asset focused entities – where having difficulty obtaining services from the incumbent banking system.
Solodkiy, Pesin and their colleagues crisscrossed the US, Europe and South-East Asia interviewing more than 20 banks, to get to the core reasons why banks will not, or cannot service, not just crypto, but SME’s (Small to Medium Enterprises) and GIG’s (a segment consisting of entrepreneurs, freelancers, informal businesses, as well as independent contractors). It wasn’t until the team met with head of the BBVA banking group, Carlos Torres Vila, that they got to the bone of the issue.
Vila helped the team isolate key reasons why traditional banks were reluctant to open up to this historically underserved market segment. One of the main reasons being that, bank staff are, in many cases, untrained in handling this niche segment. Couple that with lack of understanding (of the segment), the high cost of adjusting business models, and the regulatory labyrinth they would have to navigate to onboard such clients and you have a large market left out in the cold.
12 months after publishing a book, The First Fintech Bank’s Arrival, in which Solodkiy put forward a detailed concept for a crypto friendly fintech bank that would best serve fintech businesses, SME’s and GIG’s (a period in which SREDA where inundated with requests for assistance in obtaining banking services and token sale consulting services from the very market entities that fit into segment the concept bank was designed for), Solodkiy and team set themselves to the task of building the bank they had envisioned.
Undeterred by the customary naysaying, Solodkiy and Pesin weighed their options and decided to bet on black by applying for the most challenging banking license to obtain, a US banking license. The team set up shop in Puerto Rico, an independent US territory who’s banking system falls under the New York Federal Reserve. In mid 2018 the team began the process of obtaining an IFE (International Financial Entity) banking license which will enable them to serve businesses in other territories.
21. century service
Determined to deliver a quality product, the Arival team are crossing every “T” and dotting every “I” in an effort to bring the project to fruition. They have gone as far as enlisting the expertise of international legal powerhouse, DLA Piper, along with A.ID (a Compliance-As-A-Service provider), and compliance advisor, Promontory Group, to realize their vision.
The hatchling bank, once operational, aims to initially open it’s doors to customers in the United States, Europe, and South-East Asia before expanding to other territories. Arival will offer cryptocurrency start-ups and exchanges, among other traditionally excluded market segments, the ability to set up bank accounts and conduct their business with fewer – if any – hiccups,without any paperwork.
The start-up bank recently announced that it had raised about €2,100,000 in a pre-Series A equity crowd-funding campaign. Having exceeded their €790,000 target, the firm now boasts a pre-money valuation of €13.5 million ahead of it’s April 2020 Series A fundraising effort to finance licensing, product development and going live.
Arival Bank has hatched a new approach to banking and have geared their business model towards including underserved markets, allowing them to transact more seamlessly. The new bank’s approach stands to unlock a lot of previously untapped value from both digital assets and the ‘GIG economy’.