Bank Frick just celebrated their 20th birthday last year and has established itself into one of the most known banks that are associated with blockchain. Mauro Casellini, Head of Blockchain and Payment Service Provider, exclusively answers our questions regarding how the bank positioned itself, how it grew and also, what it needs for a blockchain-project to open one of the admired bank accounts.
Mauro’s start at Bank Frick
Ramona: Hi Mauro, great that we have found time to do an interview.
Mauro: I am very happy that you are here.
Ramona: We are talking today about your work at Bank Frick and what Bank Frick has to do with all the ICOs.
Mauro: Exactly, yes.
Ramona: Mauro, tell me, how long have you been at Bank Frick?
Mauro: I’ve been at Bank Frick for almost exactly 5 years now. I started at Bank Frick in November 2013.
Ramona: Did you start an apprenticeship at the bank?
Mauro: No, I came from the Cantonal Bank in Graubünden after my studies in Switzerland and joined Bank Frick after my studies.
Blockchain and Cryptocurrencies
Ramona: When did you first hear about the Blockchain?
Mauro: I first heard about the history of Blockchain and Bitcoin, when I were in my studies in 2011/2012. There was a professor and he followed it very enthusiastically back then. And like most people, I heard about it and found it very exciting. But then I didn’t pursue it actively anymore. It wasn’t until 2013/2014 that I became actively involved.
Ramona: And did you also buy crypto currencies yourself?
Mauro: Unfortunately, not at a very early stage. Because I was very convinced of the technology, and convinced that it would change something, but I didn’t understand then that Bitcoin itself could become so strong. But I had believed in it for a long time and then later bought it. However, for then too little and too late, for what I actually would have known.
Ramona: Are you rather trading with the crypto currencies or do you keep them on your account?
Mauro: I’m not the active trader now or the one who’s invested in hundreds of projects. For me it’s about something else – investing in use cases for the future. I want projects that are convincing, that want to build something, that want to develop something. I’m very happy to support them from my side. Personally, I also read a lot about it. I’m not the one who makes too many investments now, but I see more of how we as a bank actively help, shape, enlarge and also make a project suitable for the masses. And here it is no longer relevant to me whether a Bitcoin is worth 100,000 francs or 5,000 francs. What matters to me is that the technology is used by the masses.
Ramona: So blockchain rather than crypto currencies?
Mauro: The crypto currencies are an important means of financing a token. But yes, I’m more interested in the technology and the use case asset.
Bank Frick and Blockchain
Ramona: And at Bank Frick, you’ve really increased your reserves. How many people are you at the bank at the moment?
Mauro: Currently, we are about 120-130 people. In August 2017 we were 75 and now one and a half years later we are 130. That means there has been a big growth and now we are trying to level the structures. But it has to be said that all these changes were not solely because of the blockchain, but also because of many other issues. But as a bank, you simply must have a certain size to be able to offer something serious.
Ramona: And how many people at the bank deal with the blockchain?
Mauro: Basically, you can say, almost everyone from the bank. That’s a topic we really want to implement. Of course, some people may have to deal with it five minutes a week, some others every three weeks. We have a core team of 14 people with different areas that are almost exclusively concerned with it. But everyone ought to understand the technology and that we want to achieve something with the technology. It’s a core service for us now, but we also offer a lot more. But we simply realize that this new technology can drive progress and optimize processes.
Ramona: So, if someone wants to apply, should that person already have some basic knowledge in blockchain and crypto currencies?
Mauro: We mostly take people with a digital affinity. It is okay if you don’t a clue about blockchain because you can learn all that. But if you don’t have a digital affinity now, you’re in the wrong place. Because our goal is to be a digital, agile and modern bank. And of course, that doesn’t work with very old and analogue settings.
Ramona: Which three different blockchain teams do you have?
Mauro: There are three front teams that report directly to me. One is the team for Token Offerings and ICOs, the team for Crypto Corporate, and the Broker Exchanges. But these are only three of the front areas. Then there are teams that make certificates and structured products – they are also very active in the blockchain. In the team of asset managers, we also have a sub-team that only takes care of clients who come from the crypto world and want to enter the FIAT world. So, there are many areas that you don’t see very much from the outside.
Ramona: When did the first blockchain-related requests start?
Mauro: I started at Bank Frick in 2013 and the first requests had already arrived. That was ideal for me, as I was able to show the management that there was a demand – but it hadn’t worked out with customers back then. We noticed that the topic is very special and that we first have to build up the know-how ourselves. That’s what we did then, we created structures. In 2015 we already had the first customers with whom we grew, learned and then expanded accordingly.
Ramona: Who initiated the whole Blockchain topic?
Mauro: Basically, it was very strongly influenced by me. I strongly advised the Board of Directors and the Executive Board that it was an exciting topic and that payment should go in this blockchain direction.
Ramona: What percentage did the requests increase from the last years to this year?
Mauro: Well, 2017 was a very active year. Also in 2018, we had a lot of requests. We also had to optimize many processes. At times we received 150 emails a day with inquiries.
Ramona: Wow, and who read that?
Mauro: Exactly. We then started to create questionnaires to get a certain standard. These must be completed and you can see very quickly, within 5-10 minutes, whether the project is good. We can already reject 70 % of the cases. Reasons for a rejection would be: the jurisdiction doesn’t fit, they don’t want to make it as clean as we do, or they don’t understand what they want to do. And for the remaining 30 % of the requests, because we reject 90 – 95 % of the requests, it takes longer. It takes 5 hours or 15 hours to read the whitepapers and to notice in which direction the projects are going and what they want at all.
Ramona: That’s a very big responsibility when you accept a project.
Mauro: Agreed. It must also be clean from a regulatory point of view, it must fulfil know-your-customer obligations (KYC), and in terms of money laundering it must be cleanly positioned so that no money laundering takes place. These are things that are very important to us.
Bank Frick as a crypto-bank
Ramona: What does Bank Frick do better than other crypto banks, and are there any other crypto banks at all?
Mauro: Yes, there are a few other crypto banks, for example in Switzerland and Germany. We have also heard in other countries that they try certain things. What we do better now than other banks, from my personal point of view, is that we try to do it right from the start. Especially with all the due diligence and money laundering stories. That is the most important thing for us. We don’t want to have cases that have anything like dirty money, or that could promote money laundering, and that don’t go far enough when it comes to KYC either. This ultimately leads to the high rejection rate of over 90%, which of course also hurts the customer advisor, because some things are exciting, but in the end the cleanliness of a case prevails. We have a reputation here that we have built up and we want to hold on to it – we do it right and we do it seriously.
Ramona: Do you also believe in the projects you accept?
Mauro: Absolutely. I also think it’s very important that we are convinced that the projects work, because only then does it make sense. Because as a bank, I also earn money from the customer if he is successful. If the project does not generate sales, I gain nothing from it.
Steps to open up a bank account
Ramona: What steps does an ICO have to take in order to be accepted by you? We’ve already heard that everything must be specified, KYC-approved, a lot of documents filled out – is there anything else that an ICO has to consider?
Mauro: Basically, we like to work with those we already know the lawyer for and know who is involved and has the necessary experience – for example, if someone already has experience with security token offerings. It is important that the lawyer then knows what he is doing, otherwise it won’t fit. As soon as the cases are special and no longer just standard, we also want the OK from the financial market supervisory authorities, i.e. using the example of Liechtenstein from the FMA, or in the case of Switzerland from FINMA. We simply want to see that this project has been looked at more closely in this form, that it fits, and that it is clean.
Ramona: Will there also be a Frick Coin in the future?
Mauro: Difficult to say what exactly a Frick Coin could be. It could be a participation certificate, it could be a stock, but it could also be stable francs or euros. Surely, we are thinking about what we ourselves want to offer in this direction. In my view, however, not much makes sense for the bank in the short term. There are certainly some considerations and a lot is very likely to happen in the future. We will also be offering many new services. But I can’t say yet whether there will be a Frick Coin.
Ramona: Do you think that the curve of ICO requests will continue to go upwards? Because overall, ICOs tend to disappear. But people want regulations.
Mauro: That’s exactly what’s exciting. The classic ICO that makes a utility token vanishes. On the other hand, when it comes to regulated products, such as security tokens (stocks, bonds, bond certificates, etc.), the number of enquiries is rising rapidly. Everyone is currently working on this, but we are not yet active. This is planned for 2019 in Q1 and Q2. It’s really exciting to see how everything has arrived in the market, that it is clean, that it has to be regulated. And people are working on it, and then they come up to us and say: Can you help us to plan this product in a regulatory clean way?
Ramona: Will projects come to you rather sooner or later in their planning stages?
Mauro: Ideally at the beginning. But there really is everything. Then there are also those who come and say that they want to start next week with the ICO, and we of course have to say, not with us. And there are also those who say that they have no idea how to do what and then you can also put them together with consultants and also arrange them with companies nearby who can help them.
Ramona: Therefore, you should put a lot of work into the project at the beginning so that you don’t have to do so much afterwards.
Mauro: Absolutely, that everything is clean and the business doesn’t fall on your head afterwards.
Ramona: Because you can still do the KYC afterwards, but that’s much more difficult?
Mauro: Yeah, and reverse KYCs are very critical. That’s not an option for us at all. If it’s not done right from the start, we have a problem.
Ramona: For how many ICOs have you already provided a bank account?
Mauro: That’s a good question. Now I don’t know exactly what the other colleagues are actively looking at. But I would say, even with the historical cases, we are certainly at more than 30-40. After all, it has been very restrictive. We have received hundreds of requests and we have really rejected many and opted for only very few cases, which from our point of view also make sense, are clean, and are set up as they should be.
Length of bureaucracy
Ramona: How long does it take for a project to be accepted and have a bank account?
Mauro: So basically: if you pass the first phase, and if you have given the needed information, then it’s about how neatly the customer fills out our documents and gives us the questionnaires back. If everything is filled out correctly, then we have the account in 1 ½ – 2 weeks open. But it often takes longer, as it often is a ping-pong game between the customer and us, if certain documents are simply not filled out accurately enough. Then it can take between 4 and 8 weeks until an account is opened. We recently had a great case, an ICO, which we onboarded in 5 working days – it was all filled out perfectly. They knew exactly what it meant to fill out the forms correctly. So, you can be very fast with us. But because many of these companies are technical rather than financial, some of them have trouble filling in these documents correctly.
Ramona: Do they then also get support from you, or do they have to fill it out all by themselves?
Mauro: We also help there. But with certain questions we are not allowed to help at all from regulatory aspects and they have to get other help from lawyers or other parties. And that delays the whole thing very often and very strongly.
Ramona: I can imagine that. Do you think that the Blockchain is the Holy Grail for the future?
Mauro: No. It’s certainly a technology that can be very exciting for the future of many cases, but from my point of view it’s definitely not the Holy Grail. What I find very exciting is that through the Blockchain story many people become interested in technology. And then they suddenly talk about how this and that could still be uploaded to the Blockchain. But it’s a good step, thanks to Bitcoin and Blockchain, that many people have understood that you have to get away from the current systems and that modern companies have to become more digital.
Ramona: And what future opportunities does the Blockchain offer Liechtenstein itself?
Mauro: In my personal view, it offers many opportunities for Liechtenstein. Above all because of the Blockchain Act and the tokenization of objects, since they regulate what should be inside and with what information they represent what. And we also have a lot of inquiries from a lot of international companies, where we also say that we want to implement something in this direction and how can we do that? How can these companies support us in Liechtenstein? I think it’s very exciting when you talk about other countries, for example, and they suddenly see what Liechtenstein is doing. And we’re also trying to adapt or copy the law that we’re currently building up or change certain things. And I find that interesting. Because Liechtenstein could really be a pioneer here, that would really be nice.
Ramona: Then the whole world is now looking at Liechtenstein at the moment?
Mauro: Yes, many people are looking at Liechtenstein.
Ramona: And now we’re probably waiting for the EU to bring out a new law, and then we’ll have to adapt again?
Mauro: Exactly, I’m very excited about that. And that’s what I think is good for Liechtenstein. The country hasn’t just made any laws and is not obligated to any EU regulation. Neither the due diligence obligations or the financial law need to be changed. Everything will be nicely supplemented with the existing laws. And I am really excited about what Europe is doing and I hope that they will solve all this cleanly, that they will not block the technology and that they will simply be able to handle it in such a way that a clean business is done.
Ramona: Super, thank you for the great interview!
Mauro: Thank you, it was very pleasant!