The Rise of the Web3 Bank: Ibanera's Radical Reimagining of Finance
- By Winston Thomas
- July 15, 2024
We’ve been talking about the reimagined bank since the dot-com crash. But little has changed.
Sure, we have digital banks and Neo banks. Traditional banks have bolted on digital layers beyond their websites' internet or mobile versions. Some players are now molding their processes into a consolidated digital platform.
However, the processes remain the same, with many pointing to the complex web of laws and regulations as the reason for glacial adoption. These keep loans onerous, money away from those who need it and make onboarding a customer a costly endeavor — no matter how fast they do it these days.
However, glimmers of true innovation are emerging, heralding a potential transformation of the industry. Ibanera is one of them leading the charge.
Exploiting the Web2-Web3 banking nexus
David Jimenez, chief revenue officer at Ibanera, introduced the concept of a bank bridging the worlds of web2 and web3. “We're essentially a transactional bank, a core interoperability platform between Web2 and Web3,” he explains.
Talking on the sidelines of Money20/20 Asia Banking, Jimenez envisions a future where blockchain technology and traditional banking seamlessly converge. One such application is moving money across currencies and blockchain rails, providing a global solution for merchants and businesses.
“When it comes to the ability to move money on a global scale, you need to usually work with one of the bigger institutional banks,” Jimenez says. But their old-world risk profiling processes often prevent them from venturing into spaces like gaming, gambling, and Web3 transactions.
Ibanera fills this gap, providing businesses with a secure and compliant platform to move money across borders. It is banking on its extensive network of licenses across the globe to do this.
Blockchain: Is it still the future of finance?
Ibanera, like many banking startups looking to upend today’s banking processes, sees blockchain as a game-changer.
While this emerging technology has been in the market for years, it has had a subdued welcome from the industry. Many regulators eye blockchain suspiciously, while some are carefully dipping their toes.
There are several reasons, from a lack of a clear understanding of the underlying mechanics to the feeling that decentralized blockchains are becoming a threat to centralized approaches. The recent crypto collapses, thefts, and accusations of money laundering do not help.
Despite these setbacks, Jimenez still believes that blockchain holds the future of banking. He thinks the key lies in its transparency.
“The beauty of blockchain is that everything is visible…the problem with blockchain is that there’s still anonymity, and anonymity leads to question marks,” Jimenez.
To tackle anonymity, Ibanera is taking a more pragmatic approach. It integrates robust compliance measures, including transaction monitoring and suspicious activity reporting. These flag suspicious activity as the company collaborates with law enforcement agencies.
“We actually connect the dots between the customer and the wallet address and pair them together,” says Jimenez. This ensures that Ibanera remains compliant while enabling secure and anonymous transactions.
"Our licenses depend on it," Jimenez states, underscoring the importance of maintaining transparency and adhering to anti-money laundering (AML) regulations and KYC (Know Your Customer) procedures.
Fulfilling an economic need
While Ibanera's vision is ambitious, Jimenez emphasizes their approach is visionary and opportunistic. They identify and address clients' real-world problems, such as transaction limits and slow settlement times.
Now, the company is looking to provide a full-service solution for merchants and businesses, enabling them to settle in local currencies and expand their reach.
“The ability to spend money and drive the economic stimulus is contingent on the middle market and the [lower income segment] having access to capital,” Jimenez says. “Blockchain is going to be able to enable that.”
Ibanera is exploring new partnerships and relationships to expand its reach and capabilities. Jimenez sees the future of payments as a diverse landscape, saying there will be a time when businesses and customers will want the option to settle in tokens.
Ibanera’s belief in blockchain may not be wishful thinking. Regulators in Southeast Asia are beginning to warm up to blockchain transactions. Thailand has the ICO Decree. Singapore introduced a Stablecoin regulatory framework last year, and Hong Kong has a virtual asset licensing regime at the same time. As crypto and blockchain use matures, Ibanera will be well-positioned to navigate the complex regulatory landscape.
A new financial era, finally
It’s not going to be all smooth sailing. Speed to market and expanding service offerings are critical challenges for Ibanera, according to Jimenez.
The company's first-mover advantage in securing licenses gives it a head start, but it must capitalize on this by rapidly expanding its services and reach. Localizing settlement capabilities to cater to the diverse needs of merchants and consumers across different regions is another crucial aspect of their growth strategy.
However, Jimenez remains optimistic about the future, stating, “There's no better time to be alive in the payment space.” He sees more blockchain-related disruptions in banking appearing in the next five years.
Looking ahead, Jimenez envisions Ibanera continuing to push the boundaries of transactional banking, leveraging blockchain technology to create a more inclusive financial ecosystem reimagined from the ground up — and it’s about time.
Image credit: iStockphoto/AntonioSolano
Winston Thomas
Winston Thomas is the editor-in-chief of CDOTrends. He likes to piece together the weird and wondering tech puzzle for readers and identify groundbreaking business models led by tech while waiting for the singularity.