"Precisely in places without tech infrastructure, such as Africa and the Philippines, fintech solutions are growing"

Financial solutions in a world without borders was the topic at the center of a panel held on Tuesday as part of Calcalist's 2022 fintech conference in collaboration with Bank Hapoalim. The panel was moderated by Calcalist reporter Viki Auslender, and featured Idan Ofrat, CTO and co-founder at Fireblocks, Moshe Kimhi, CEO of Neema, and Yuval Tal, Managing Partner at Team8 Fintech.

Fintech conference panel (left to right): Idan Ofrat, Moshe Kimhi, Yuval Tal

Technology imagines a world without borders, how do we operate within it? What solutions do you offer to customers?

Moshe Kimhi: "When we founded Neema, we aimed to truly understand how to make finances accessible to customers. In the beginning we dealt with foreign workers who faced a big problem entering the financial system, it was a challenge, and over the years many Israelis who needed solutions also joined. During the pandemic this took on a new meaning, a lot of citizens changed their financial status and looked for alternatives, that’s where we realized that the world is limitless and financial service does not have to be in the bank."

Idan Ofrat: "The last 15 years have been years of building infrastructure above the existing banking system, an infrastructure that actually expands these services. Some succeeded and some did not, and in the end in order to make a significant change in the field you have to pack everything up and rebuild. That is essentially blockchain - a technology that is more open than what exists today. Blockchain now allows anyone, whether in Manhattan or Thailand, to build a system or financial service in a uniform protocol, and this is our vision. We provide infrastructure. We also give banking entities the ability to integrate and build a new infrastructure, an easier financial system, which is more convenient, safer and faster.”

Some customers do not have the technological infrastructure, how do you build products for a person who does not even have broadband?

Moshe Kimhi: "Precisely in countries that do not have such infrastructure, fintech solutions are growing. In the Philippines and in Africa, there are leading giants with millions of users and they are the first tech adopters. Perhaps we as Israelis remain in the classic traditional world. Neema is a stand-alone company - you have a digital account and you can connect to both the banking system and another system, it is possible to deposit money into digital accounts in developing countries as well. We now see a trend of cash transfers and in the last two years most of the loans have been transferred to digital accounts."

Borders are a given or a challenge?

Yuval Tal: "We have the ability to look for places where there are no companies. We look at everything and it is surprising that companies worth billions can come from nowhere. This cross-border world is a world with potential. Bank Hapoalim, for example, looks at it in import and export niches. This world has tremendous potential for Israeli entrepreneurship."

What are the trends we are seeing now?

Yuval Tal: "There is no debate about the success of some areas. Electric vehicles, charging stations, tariff management, the world of influencers is also fascinating - for example Tiktok. People spend countless hours on Tiktok and Instagram, these are people with tremendous economic influence, and it goes far beyond the Kardashians. There is also the world of supply chains. There is substantial financial uncertainty today among small businesses that want to sell online and it is a world that will be very interesting in terms of its fintech and connection to finance. As far as the world of e-commerce - if we look at which stores were popular three years ago - we are seeing a tremendous change. The stores that will be popular in another five years have not been established yet."

There is cooperation with the traditional financial system. Is it a complementary product or a player that is a competitor?

Idan Ofrat: "There is no competition. We are an infrastructure provider and we work closely with traditional financial entities - from traditional banks to dot com companies. These are not companies which have crypto in their nature. We provide such entities with complementary infrastructure to connect them to the new world. In the coming years it may just be complementary capability for innovative customers - but in another ten years this will be the basic infrastructure of such entities. Like an individual who wants to transfer money from a bank account in Israel to an account abroad, who suddenly realizes that it takes three days. Financial entities face such problems, even banks. And we work with everyone."

Is technology the problem?

Idan Ofrat: "The challenge is that regulation makes everything look a little slower than desired and that’s not necessarily something bad. That's not the whole problem, the problem is also technological. Meeting regulatory requirements takes longer than doing so in a new technological infrastructure. Money that passes between financial entities in the old world has to go through a slower system compared to if everything had been rebuilt in real time."

Moshe Kimchi: "The key is to work through regulation. There is a difference between a customer transferring 2,000 euros to a supplier in Spain via Fiverr and someone buying a villa in Greece. When we started out we wanted to provide these money transfer services - and now that we have the infrastructure and regulatory understanding, we make these services accessible to financial entities as well. If you know how to connect both technology and regulation, you can also serve financial entities."

Yuval Tal: "There is no fintech without banks. When you want to provide something related to credit, you need a bank behind it. Beyond that, many companies find that it is much easier to give money than get it back. Being a bank is not fun, many companies want to keep this part independent. A combination of a company that runs forward and a bank that keeps it in balance is a good combination."

Idan Ofrat: "We have a customer, an Australian bank, that issues stablecoins on a blockchain and they did it in three months. On the other hand, there are banks that we are still trying to convince to connect to cloud solutions. As Yuval said, it is impossible to leave the banks out of the picture, most of the resources are with them. The banks must also understand that if they do not understand the revolution, they will be left behind."

Moshe Kimhi: "Fintech focuses on customers who receive a more accessible answer from the banks - and this is what creates the perfect balance between the two."