Cross-Border Payments on blockchain: An interview with Avi Sarkar, Founder & CEO Drop Money
CEO &Founder Drop Money — a cross border system on blockchain under PSD2/GDPR regulations. He is Co-founder of CapOne Research, a blockchain based financial solution — cross border system on blockchain under PSD2/GDPR regulations. Avijit is a career Risk Management professional, having worked with one of the largest conglomerates in the world GE Commercial Finance in Operational Risk, Risk Audits and Process Controls. Overall, he had 12+ years of corporate experience in the field of Risk Management & Health Care in India before coming to Estonia to build his startup.
Avi, could you tell more about your background and how you come up with the decision to launch your remittance startup?
I have 10+ years of experience in BFSI domain, more specifically into Operational Risk, Portfolio Management, worked extensively in US & European market, in commercial finance, vendor financing. Worked with some of the most valued companies like GE Capital, Pfizer, Cardinal Health, Genpact.
Image1. Avi Sarkar at the Annual EU investment forum
Currently, I am building my own Startup CapOne Research, which is primarily building Cross Border Payment solutions on Blockchain with Open Bank API(PSD2), Instant Retail Payment Wallet and Mobile Banking Solution on Blockchain. CapOne Research is proudly bootstrapped and we are looking for like minded and serious investors to come on board with us to get our product to the next level.
Image 2. Avijit Sarkar, Kwun Lok Ng, Shaun Deanesh and Lauren Proctor at EMN Annual Conference in 2017
Avi, tell a bit about your startup Capone Research and the solution you are developing:
- It is a blockchain based solution for cross border transfers and payments that will be available both on App and web. I founded the startup in Estonia. This country was linked to the e-residency program that allowed me to familiarise with the business environment in Estonia and the EU and to be better prepared before applying for startup scheme.
For your better understanding of my product, here are some points of the business context that product should provide:
- Transparency and immutability of ledger ( it could help us to build the trust between service, investors and regulators)
- Investors can provide liquidity in domestic banks
- PSD2 for cheap remittance
How come you decided to focus on cross border payments (or remittances)?
I faced with the troubles sending money to India, the transactions are very expensive, slow and cumbersome thus I come up with this solution that could solve not only my problems with the remittance but also for lost of people suffering from complexity in communication with banks for getting the bank wire (lots of docs, sometimes non understandable reasons for getting a wire transfer.)
With what companies you think, the cross border system could compete?
- Remittance services like SWIFT, Western Union, Transferwise, UAE Exchange long list)
- Export/Import settlements
- International Payouts / Salaries
- Companies offering smart banking solutions for b2c and b2b customer
- Crypto wallets (for cashing out in the local currency)
- Foreign Exchange Platforms
Your solution is based on a blockchain, why? What business value blockchain could bring for this project?
I did a lot of research to understand the potential of blockchain technology, that could assure the security and light on admin. The blockchain technology introduces the following core benefits for my product:
- Provide cryptographic-proven immutable history
- Ability to automate fraud-detection cases based on ledger’s history
- Ability to automate business processes based on smart contracts feature
- Ability to control data visibility for parties involved in the transactions via channels
- Ability to easy open data for new parties
Image 3 Diagram of the refinement use case
I also have some tech background and based on all mentioned above pros of using blockchain for the remittance system, I could finally solve the problem with the slow and expensive cross countries wires.
What blockchains did you consider?
We were considering with a team Stellar, Quorum and Ripple and based on the specific business goals decided to proceed with Quorum. It is built and open sourced by J.P. Morgan — reliable, fast enough for remittance case and scalable.
Finding talent to build your project is often difficult, how did you solve that?
Indeed, I interviewed many firms took 4–5 months and found you guys from 4irelabs. Additionally, you previously worked with fintech companies from Copenhagen fintech hub, where I was connected with you. You have the right know-how and understanding of blockchain, the business case, PSD2, and GDPR regulations.
Your background is in commercial banking in the united states, how come you decided to start your company in Estonia?
- Estonia understands the importance of blockchain. Blockchain E Governance pioneer, healthcare, etc. They have a basic understanding. IT infrastructure is best in the world, world leading, cost of living very low. Therefore it’s a good place to have a startup.
Cross border payments are only one of several applications of your technology, what other use cases are you working on?
- Retail payment solution with digital KYC system and wallet. Pay with NFC enabled phone/QR code
- Peer to peer payment
- Aiming to build the first blockchain based Neobank
Finding talent is one part of the equation for a startup, capital is another. How has it been to raise capital in a market that is new to you and what are investors asking for at this stage?
- Difficult to come in as an “outsider”, but gaining traction
- Investors are asking about KYC when you raise capital for a blockchain/fintech business
You’ve mentioned that partnered with the Madrid Blockchain Association?
Could you clarify why this Association? Do they actively support blockchain based startups?
You can find more info at Blockchain Hub Spain, however, they are actively supporting the blockchain based fintech innovative startups. They are a new body and backed by some wealthy Israel investors. They are bringing all small and mid-size blockchain and crypto companies under one umbrella in Spain. They have also partnered with Blockchain center in Vilnius.
Do you consider to collaborate with Swedish banks as they are very open for PSD2 integration?
I’ve already signed the partnership agreement with the Latvian bank.
In parallel, I’m negotiating with the Swedish banks as they are more open for PSD2.
What are the biggest constraints the founders of the fintech startups could face with?
The security issues and talents with the practical background. Plus it would take significant time to negotiate and sign the partnership agreements with the partner banks, KYC providers, regulators.
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