Swiss-based Dukaskopy is the first licensed bank in the world to issue a crypto coin and is thus preparing for a new era in banking, company founder Andre Duka explains in an interview with finews.com.
Andre Duka, why is your bank issuing a crypto coin?
Let me dig a little deeper. I will give you a rather philosophical and technical answer to your question. From my point of view, the traditional banking industry has reached a point of inflection: the previous business model has had its day.
Banks are caught between the changing demands of their customers – not least triggered by digitalization – and the increasingly restrictive rules and regulations of supervisory bodies. So, they have no choice but to simply «obey» – bankers are like soldiers at service because of strict regulation.
A bold thesis. What is the solution to this problem?
In my opinion, international retail banks must invest in five areas of infrastructure if they are to remain successful. First, they need a powerful mobile banking app that includes all their banking services. Second, they need a full-featured and secure messaging service to communicate with customers.
«All bank processes and services must be linked via a chatbot equipped with artificial intelligence»
This is the future because it will greatly intensify interactions between the two parties and allow many transactions to be derived directly from them.
Thirdly?
In the future, all bank processes and services must be linked via a chatbot equipped with artificial intelligence (AI). In this way, tailor-made offers can be generated and processed immediately. This functionality is based on the requirements mentioned at the beginning: app and messenger.
What else?
The onboarding process must be completely digitalized based on scanned copies or video call identification. In the future, I do not believe that many customers will visit a bank branch to open an account. This, in turn, places the highest demands on know your customer (KYC) guidelines and money laundering prevention.
«Currently, we open around 750 accounts per day, and this number is constantly growing»
Last but not least, banks will have to introduce crypto technology. Against this background, we were the first licensed bank in the world to issue a coin.
Which brings us back to the question of what such a cryptocurrency may bring. In most cases, the sale of coins is a means to raise capital. Is this also true for Dukascopy Bank?
No. Our project is conceptually and strategically completely different from what we have seen so far. And it is not aimed at raising capital – rather we are «giving away» the coins to our new customers.
What for?
Let me first explain: Each person who opens a new account with us or refers a customer to us will receive five Dukascoins free of charge. We will also have an online market where you can buy and sell these coins.
Again, what is the intention – and more importantly, what value will a Dukascoin have?
It is a market that has to decide about the value. Market price is always a compromise between demand and supply. In the case of the Dukascoin, supply is limited by the number of new customers opening live accounts, the only trigger of new coins release.
Currently, we open around 750 accounts per day, and this number is constantly growing. On the other hand, demand depends on the clients willing to purchase coins and keep them for various purposes. The bank offers a lot of unique opportunities for those customers who would like to benefit from Dukascoins.
«I think that a Dukascoin has a target price of about 10 euros»
Today, at the very start of the life cycle of the Dukascoin the market has stabilized at the level of 0.75 euros per 1 Dukascoin. I don't want to speculate too much, but I think a Dukascoin has a target price of about 10 euros. But, of course, this depends on how many people will discover all the benefits the bank offers to Dukascoin holders.
What About the future Potential?
We designed three income-generating programs and secure the automatized marketplace to buy and sell Dukascoins. All the programs open unique opportunities. People who will spend time on researching will benefit the most. As more people will do it, as higher will be the price. I guess this will take time. We take it as a great success to have a stable price of 0.75 euros vs a Dukascoin in one month period since launch.
«For instance, Bank Cler from Basel pays 50 francs for a new customer as a welcome bonus»
If we speak about future potential, I can justify the target price of 10 euros per coin. Today 50 euros is becoming of industry standard, how much the bank has to pay to attract a new retail client. For instance, Bank Cler from Basel pays 50 francs for a new customer as a welcome bonus. 5 Dukascoins at 10 euros each will meet this industry standard. In principle, this is how the further growth of the bank will be fueled.
What is a Dukascoin from a technical and an accounting point of view?
Our coin will not have a complex structure. We have opted for the widely used ERC-20 standard, which is based on the Ethereum blockchain. The coins will be reflected both in our balance sheet and in the blockchain.
What is the vision of Dukascopy?
Dukascopy Bank is a Swiss bank licensed by the Swiss Financial Market Supervisory Authority (Finma), and already well advanced in terms of technology and fulfilling the aforementioned requirements for tomorrow's banking.
We were one of the pioneers in online onboarding in Switzerland, and are now the first licensed bank to set an example with a crypto coin. Our technology and infrastructure ensure our continued success as an online and retail bank.
Moscow-born physicist Andre Duka came to Switzerland in the 1990s, to work at Cern in Geneva. During this time, he developed a financial platform with partners, which initially developed into a brokerage house in 2004 and became Dukascopy Bank in 2010. Duka is the Co-Chairman of the Executive Committee, Co-CEO, and CTO of the Geneva-based bank. The company is now a world-leading online bank with offices in Kiev, Moscow, Hong Kong, Shanghai, Riga, Kuala Lumpur, and Tokyo. Duka, who became a Swiss citizen, is a key player in ensuring that the Swiss financial industry is at the forefront of technology – for example in online customer identification, and now in the issuance of a cryptocurrency by a licensed bank.
