When he set out to build the world’s first truly global digital bank, EQIBank founder Jason Blick took some lessons learned, added some eternal truths, and looked to where he saw the banking world heading.
Mr. Blick founded his first bank in 2006, and as he grew it he saw some problems with the industry. Fast forward nine years to 2015 and the founding of EQIBank and he believed the technology to solve those issues was now present.
The goal is to deliver global digital banking services to corporate clients and high net worth individuals. Digital banking had started arriving and Mr. Blick loved its potential.
“There was a distinct breaking point in the existing model, the idea that a few big banks coordinating global relationships was becoming less attractive,” he said.
Large banks were operating separately in each jurisdiction and only focused on that region and not the global whole. It was common to see individual branches of the same bank competing against each other for the same business. Instead of wasting time with infighting, why not create a format where opposition was actually other banks and not themselves?
That is what EQIBank delivers, Mr. Blick said. They provide uniform delivery of single product streams across 180 countries. He sees EQIBank as a global financial services supermarket offering a single point of entry for global businesses and the model works.
“We believe that has been quite advantageous in addressing the needs of global corporates so they don’t need 15 or 20 relationships,” Mr. Blick said.
Providing uniform service across 180 countries with varying compliance procedures is a challenge, Mr. Blick said. EQIBank’s standard AML and KYC processes are much higher than national banks, and he believes that provides extra protection when dealing with emerging and developing countries.
That service takes work, however, as 40 per cent of EQIBank staff are in compliance. The legal team is also large, said Mr. Blick, himself a solicitor by trade.
“We have five times as many people in compliance as we do in relationship management,” Mr. Blick said. “Our reliance on tech is significant. That plus a very competent compliance team plus a great legal team means we are pretty effective at weeding out clients who are inappropriate.”
Another important factor in EQIBank’s success is its openness to white label services of other companies. When adding services beyond core competencies such as cryptocurrency exchanges, it makes sense to leverage successful technology instead of reinventing the wheel.
“Many banks are reluctant to take on white labels and focus on proprietary product sets,” he said. “They built massive product teams around these proprietary sets which they deem to be an advantage but in the actual fact it’s not because many big banks replicate the proprietary structures across all these geographies. In some instances they actually compete with their lines of business in other countries.”
At EQIBank, one relationship manager serves each client across their geographies. Select clients may also white label all of EQIBank’s products and go to market to their own clients with their own brand.
“This is something we’re really excited about,” Mr. Blick said. “We believe that’s the next phase of banking. It’s very much been anticipated for a long time.”
EQIBank was also quick to embrace cryptocurrencies, Mr. Blick said. They began working with it in 2018 when most were, if anything, putting a toe in the water. The attractions include removing risk from balance sheets and offering an exciting product range supported by licensed and regulated banks. EQIBank’s DeFi offerings include a fixed rate loan program where lenders and buyers can participate directly with each other, a variable rate/money market product, an interest rate swap product and a yield aggregator which farms across the world.
While much of the future is unpredictable, two likely events to watch for are the failure of some retail banks, and acquisitions as others with faltering business models struggle to raise funds and become attractive to bigger players interested in their technology, Mr. Blick said.
The fintech industry is at the stage where large changes typically come as companies die off and consolidation occurs. Mr. Blick sees that coming for fintech, especially those chasing retail clients.
“For us it’s a bit different because we focus on corporate and high net worth individuals, so we have a route to profitability whereas the retail digital banks have really struggled to find that route to profitability,” he explained. “Some are trying additional product sets, particularly lending. Some are trying to introduce maintenance or monthly subscription fees, but I think it’s fair to say every retail or digital bank really is adopting that Uber model which is constantly raising money in order to gain that market share.”