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While traditional banks are still the basis for today’s financial system, most of the functions they perform are outdated. Andrew Zimine, CEO of next-gen financial ecosystem Exscudo, unveils how Exscudo’s going to provide real financial freedom to its users.
Banks undoubtedly play an important role in the financial system of the modern world. The economic activity of any state is impossible without the participation of banks.
There are both political and economic reasons: in the first case, it’s the legislative system (banks are often responsible for the control of financial flows); in the second case – banks really perform the function of providing business liquidity (although, mostly financial institutions are trying to reduce their business to credit and transactional work, which are the easiest to implement).
However, amid certain regulatory restrictions, large portion of functions provided by banks are simply outdated. Here comes blockchain – the technology which carries real innovation to the sector.
Now it seems that a missing technology needed to implement the lacking functional has emerged. We contacted Andrew Zimine, CEO of Exscudo – next-gen financial ecosystem comprising features of a centralized exchange and blockchain tech, to find out how Exscudo’s going to provide real financial freedom to its users.
Will the world slip into financial anarchy if banks vanish?
AZ: Definitely yes. Today a bank is the center where all individuals and legal entities come for service. All economic activity one way or the other is found in a bank.
The banking sector is responsible for too much today – and in my opinion, it’s not optimal. Today the bank is responsible for far more than just the transfer values at a distance and if to assume that banks will suddenly disappear, there will definitely be a collapse! Legislation of many countries is designed to work with the banking sector. Enterprises simple wouldn’t be able to interact with each other because of the lack of both, accounting and financial tools.
What can replace banks?
AZ: Any other system that will better perform functions that today banks perform today, but do it better. And in advance, I will say that the blockchain will not be able to replace the bank in the form in which the average bank is functioning today because transactional business is only a part of the tasks that banks are responsible for.
Banks have been the pillars of the economy since Babylonia and Ancient Greece. Why suddenly they should be replaced now?
AZ: Actually, the banking sector has undergone many changes since then and banks that we know today are far different from the ones from the past. The banking sector has huge financial tools: letters of credit, overdrafts and much more – something that was simply impossible at the dawn of the banking sector. I do not even exclude such a scenario when we would call the center of decentralized systems a bank. However absurd it might sound.
What are the main problems of traditional banks?
AZ: The banking sector is one of the most regulated sectors, and, in fact In fact, far from being one of the most transparent. Today, being a manufacturer of any product you have a chance to lose the business just because the bank doesn’t like you. Though your activity might entirely comply as lawful and economically viable.
Moreover, the situation in the very banking sector itself is very ambiguous. Banks are not equal – the regulator may “allow” one bank to make certain financial operations, for example, onboarding of non-residents, but restrict this operation for other banks. This is no longer a competitive fight for the market share. Moreover, directives and laws produced by the regulator are not always 100% clear (in most cases!). Decoding and comments are required, to interpret this or that document precisely.
However between the date of the law entry into force and the date of the release of the comments as much as 6 months can pass. As a result of which small banks, in general, try doing nothing (losing customers and their market share!), while medium and large interpret regulations however it suits them – which can lead to very bad consequences. Because the financial inspectorate can punish them in hindsight – and this is happening all the time throughout Europe.
The bottom line is that we have a situation where the rules of the game are not certain and an unpleasant surprise can appear from any direction. It influences and handicaps the market catastrophically (no new players appearing, high entry barriers, lack of fair competition, etc …)
How can blockchain products solve these problems?
AZ: The most interesting is that blockchain can guarantee transparency and equality. And this is the main plus for the industry. Yes, technology is cheaper, faster and safer but at equality is the most important aspect. Regulations will concern all player equally rather than selectively, which is how it is happening now. And of course the blockchain will bring all of its other advantages to the industry – we will see banking in a new way.
Ok, so banks are gone. How blockchain apps can ensure that they are not used for shady transactions?
Today, banks offer very advanced e-products. Do you think in future these products can become more useful and innovative than blockchain alternatives?
AZ: Let’s go one by one – which advanced solutions do banks offer? Online credit? Reports from the personal cabinet? Insurance abroad? Utility payments? Those functions are outdated. Blockchain carries real innovation to the sector. For example, p2p lending, collective payment purchases, co-insurance – not a single bank can offer similar services because of the architectural and regulatory restrictions, especially at this level of security and at equal prices.
What if banks just start using cryptocurrency like stablecoins? Will it help banks to provide more advanced services?
AZ: No. Stable coins are simply a form of payment. From the point of view of the financial system, it does not matter what calculation units to use and what qualities they possess. Stable coin, the in current situations, are an adaptation for banking barriers by cryptocurrency projects. and I’m sorry for banks that try to replicate this technology for themselves.
No one can repeat the Bitcoin phenomenon, I am 100% sure of this.
What do you think about JPMorgan’s coin?
AZ: The same that I think about GoldenSucks coin, HSBC coin or any-bank-coin. Nothing. They will not give the world anything new and beneficial.
What are the benefits of Channels compared to traditional banks?
AZ: For starters, there is a very important term in the modern world – private ownership. However, this concept somehow eroded over time. The money in the bank in your account is not your money … What’s more, you can not dispose of them as you wish. You can’t come to the bank and withdraw 1 million euros simply because you want to recount this million in the evenings or just have such a fetish, and this is all despite the fact that the origin of these funds is completely legal, for example, you saved up and worked for this money for 30 years.
So why am I talking about this, when the question is about benefits? This example does not mean that Channels is a tool to get 1 million euros in cash. Channels introduce the concept of digital cash. It is like digitized money, money existing in the digital world (BTC, ETH, and even euros and dollars), but your funds are accessible only to you! Neither the state nor the bank nor the developer can get their hands on your money!
And this is an alternative to the way that banks have set us on – to remove cash, drive everyone into the banks and finally introduce the negative interest on deposits.
Why is Channels even better than a bank?
AZ: Will a bank allow its customers to communicate with each other? Or maybe will it give a tool for making deals? Most likely – no. Channels is a collaboration between financial and social instruments. Want to use it as a repository, want to communicate with friends and share content, want to save a penny – join thousands of collective shopping programs or even open your own shop right in Channels.
Why did you decide to create a financial ecosystem Exscudo?
AZ: Because a missing technology needed to implement the lacking functional has emerged and the current financial system is becoming the very bottleneck that not only holding back the progress but sometimes even pulls it back.
Why do we use electricity for lighting houses and streets? But not use whale oil as before? After all, the lanterns were giving light… Because it is much more efficient to get renewable energy for our light sources. Here is one example of how technology fusion gives rise to a successful solution. The banking system today is whaling business 200 years ago. But I love whales, so I decided to create Exscudo!
How does Exscudo work?
AZ: Exscudo is a hybrid system. We are not crypto-anarchists and understand that this is the same road to nowhere. Therefore, the system has gates: (centralized systems) without which it can’t function – for example, KYC and AML data collection and analytics. But there are also decentralized components implemented in places where information should not be collected in one spot for all sorts of considerations like. for example balances, confirmation mechanisms, etc …
In the center of the ecosystem is the liquidity center – the Exscudo exchange that allows working with many currencies. Surrounding the Exchange – EON, a blockchain linking the whole ecosystem together. And Branches – Channels, Merchant. And EON allows you to create, and services – to utilize. The exchange opens opportunities for services to market courses, while the blockchain is responsible for value transfers. This is if I were to explain briefly.
Will Exscudo help to revolutionize the financial ecosystem?
AZ: I don’t like the word revolution, no matter how proudly and freedom-loving it sounds. I much prefer to use the term “evolution”. It is a logical development process without shocks and troubles.
Remember how we switched from the button phones to smartphones. This happened smoothly, without any riots. Manufacturers were simply able to offer a more convenient device format for uses and people smoothly started switching to touch devices, giving up the push buttons. It concerns many industries, and unfortunately, the financial system is at the end of the line.
I believe that the decisions that we integrate or still planning for development and integration in the future will have a significant impact on the financial ecosystem as a whole. Of course, I would really like to see our solutions implemented as part of the Excudo project.
Can you say some words about Channels App? What are the main advantages of the product?
AZ: In the company, for a very long time, we have been thinking about how to describe Channels in 2 words the best way. We came up with a lot of ideas: Bank 3.0, a bank “in your pocket”, finances in your pocket. But I think, nothing better sums up our application than the word “freedom”. With Channels, you can communicate with anyone, pay, store, change, sell, eventually even create what you want.
It’s like Google just in the world of finance.
Can Channels App replace banks?
AZ: To some extent, yes. It will close 99% needs of ordinary users. And the PRO version will be available soon for entrepreneurs.
What are the applications of Channels in real life? How will it improve the lives of its users?
AZ: Best to explore this based on two examples.
The possibility to make a payment anywhere in the world where there are internet and terminal service is no surprise to anybody today. And I must pay tribute to the 2 great payment systems for their work. But, in fact, it is not so convenient and cheap as it might seem. If you get paid in Euros but want to pay in Thai Baht, then the conversion will cost you a penny. If you are a seller, then while selling your goods today, you have a chance of getting your money only in a week time.
Channels, through our ecosystem, solves these problems – you pay anywhere in any currency with a stock exchange commission and the seller gets the money immediately without waiting for clearing and for all intermediaries in the chain to process the transaction.
For example, you are a financially literate man and you would like to move your assets to the most liquid and promising financial assets – please, 2 clicks and you are in the right financial instrument. You don’t have to trust anybody or rely on anybody. It’s all yours and you, at any time, can move funds, for instance out of Channels itself using your private keys and transfer your assets to the blockchain that you wish.
You have 200 contacts in the Channels contact list: you do not need to know a bank account or card number – just send funds to anyone from your list in any currency that you want and send as much as you want to. Channels will do everything on the fly! It will exchange your currency into the required one, reaching the amount that you specified, while doing it as cheaply as possible and instantly.
You want to pay a bill in a restaurant, but there are 5 people at the table – please also not a problem, just choose an account that will collect the required amount and pay your portion of the bill to that account.
Want to try yourself as an entrepreneur? Also not a problem, without any special knowledge you will be able to open your store right in Channels, get your personal support channel for future buyers and a product demonstration channel or description services right in the app and start receiving payments.
You know the possibilities that Channels already provides are in fact, very diverse. And we have even more implementation scripts! I will stop there, and to all interested – just download the app and dig in. Maybe, you will find something that did not even occur us!