The full-usage product will be ready only in the middle of 2019, as a result, competition level will be substantially higher There are high regulatory risks in chosen market
Now there is no developed product Project does not have focus at all.
FSBT tokens are not crucial for banking services. Due to the fact, that most part of the project’s profit comes from commissions, FSBT is not involved in profit generation.
There is absolutely no information about income or costs from exchange and derivatives trading, rating agency business and ICO due-diligence, nothing about service for developers and income from developing the complicated ecosystem of developers. Finance model is based on opportunistic assumption and take into account only part of the business The team has unrealistically high expected income from trading (20%). Commission income constitutes more than 70% of total income
There are no direct competitors nowadays, however, the full-usage product will be ready only in the middle of 2019, as a result, competition level will be substantially higher. In addition, there would be a lot of indirect competitors. For example, ongoing news about Telegram Open Network (TON) creates a serious challenge for Forty Seven Bank. At the same time, current huge banks are extremely slow in adaptation to changing reality. Moreover, due to high number of branches banks are cost-inefficient and generally do not provide a contemporary level of service in online and mobile banking. As a result, Forty Seven Bank could bite even well-known banks. Current target segment of the project is people born between 1980 and 1990, commonly known as a “Generation Y”. Most of them do not value bank’s branches and require high-quality digital banking. In addition, they tend to use and invest money in crypto assets. Service that would provide a convenient connection between crypto and real world would be definitely required by this audience. Capitalization and popularity of cryptocurrencies is constantly growing nowadays. As a result, it is a great moment to enter to this market. At the same time, the financial market is highly regulated. Especially, after world financial crisis. It is supposed, that cryptocurrency world also would be regulated heavily in nearest feature. As a result, there are high regulatory risks in entering this market.
Now there is no developed product. However, founders promise, that Forty Seven Bank will be a fully digital innovative branchless financial institution which complies with all EU directives, Basel III, Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and Bank of England requirements. There are two main features of the product. First is building a bridge between cryptocurrency and fiat money finance worlds. The project is going to provide a full range of traditional bank service for cryptocurrency world, including hedging instruments. Moreover, there will be Crypto Bonds, Crypto Futures and Crypto Options. Second is a bank platform for fintech developers. Open API allows an external developer to create modern financial services based on Forty Seven Bank’s infrastructure and internal processes. These applications can both expand the functionality of bank’s products and adjust to needs of other company. Use cases of such applications are limited exclusively to programmers’ vision and preferences of potential clients. Forty Seven Bank will hold DevDays technological conferences for independent developers and financial institutions. They will invite both experienced developers and new enthusiasts who are interested in use of bank’s API and creation of new products. They also plan to implement educational programs and courses with priority access For Forty Seven Bank token holders. Moreover, Forty Seven Bank will have an unusual structure and set of services. Bank will provide a multi-currency account, including cryptocurrency and fiat money. Remote identification and authorization using the passport and biometric data. To become a client of Forty Seven, one needs to visit bank’s website or download our application. Identification is done online without the need to visit a local bank branch. Client’s payment card is then sent by mail to the address stated in the registration form. The bank is going to have branchless structure and build all communications with the client online. The only one offline channel for interactions with consumers is ATM. For simplifying it’s procedures, the bank is going to develop machine-learning based chats. Consumer’s support is going to be outside of UK. There would be also the product for small and medium-sized enterprises. These products will allow quick integration of cryptocurrency payments for both online and offline use. The funds transferred will be automatically converted at bank’s internal exchange rate and accredited to organization’s account in corresponding fiat currency. Moreover, the project is going to provide open-source due diligence on ICO projects and become a rating agency for them. And finally, Forty Seven Bank will emit price stable cryptocurrency that is backed by equal reserves in fiat currencies, such as USD or EUR. In a nutshell, project team promise to develop the full set of financial institutions. In case all of that would be done, the project could become a worldwide leader in banking market for cryptocurrencies world, however, it seems unreal at all.
FSBT tokens would be a crucial part of developer’s ecosystem of Forty Seven Bank. Holders of FSBT tokens have the right to receive yearly bonuses in the form of FSBL – Forty Seven Bank loyalty tokens. Besides that, FSBT tokens will be needed for developers in order to get the access to full range of products and services. After the crowdfunding campaign is finished, FSBT tokens will be available for trade at various cryptocurrency exchanges. Developers will need to have at least 1000 FSBT in order to launch their application at Forty Seven Bank App Platform. The amount of tokens needed is dependent on the complexity of the application and some other factors. For businesses, having the necessary amount of FSBT tokens will be essential in order to build an automated business with integrated blockchain and smart-contract technologies. At the same time, FSBT tokens are not crucial for banking services. Due to the fact, that the most popular cryptocurrencies is Bitcoin, Ethereum, etc. It should be expected, that FSBT tokens would not be widely involved in this part of the business. Due to the fact, that most part of the project’s profit comes from commissions, FSBT is not involved in profit generation. At the same time, FSBT is involved in profit distribution. It is stated, that 20% of bank’s profit will be distributed to tokens holders. As it was mention in finance part, most part of bank’s profit depends on cryptocurrency clearance and exchange. It is unsustainable model, due to rising competition on exchange market and decreasing profit of it.
Finance model of the project is well prepared, however, based on opportunistic assumption and take into account only part of the business. There is an unrealistic estimation of future profits. It is impossible to become profitable organization within 1 year. Despite the fact, that bank is going to have cost-effective branchless structure. The project team has introduced own capital requirements, which is substantially higher, than regulators requirements. Leverage ratio also is higher, than Basel’s requirements. This significantly decreases risks of the bank and the whole platform. Higher reserves should lead to smaller profits. As a result, in terms of profit, FSB has disadvantage compared to usual banks. Moreover, most part of bank’s assets would be in cash, cash equivalents and CB deposits. This part of bank’s assets could not generate any return at all in current reality. Project founders declare, that main goal is creating the platform for fintech developers, however, in finance model they do not include income from the platform at all. Three main income flows is interest, commission and trading income. Moreover, commission income constitutes more than 70% of total income, compared to 40-50% for usual banks. Most of commission income comes from clearance procedure for cryptocurrencies. There is no information about assumed commission rates. At that moment, commissions seem extremely high. It is not clear, why consumers should pay substantially more for banking services and switch to Forty Seven Bank. As a result, most part of bank’s income depends on rates and competition on cryptocurrencies exchange and clearance market. At this moment, there is no monetization plan for API for fintech developers and white label bank. Trading portfolio assets will rise from 5% of total assets in 2019 up to 26% in 2022. The team has unrealistically high expected income from trading (20%). Such level of expected return assumed too high risks for the bank. As it is said in the business model, the main source of capital will be current consumers account. However, there are substantial restrictions on managing consumer’s current accounts. Capital is cheap nowadays, especially in interbank deals. At the one side, it is a great news, it declines the cost of attracting capital. But on the other hand, it is terrible news, because of the fact, that it is extremely hard to generate an income on own assets nowadays. There is absolutely no information about income or costs from exchange and derivatives trading, rating agency business and ICO due-diligence, nothing about service for developers and income from developing the complicated ecosystem of developers.
The team of Forty Seven Bank has significant experience in creating and developing digital financial products and services. As a result, team has good understanding of potential technical implications the financial institutions might face in day to day operations. CEO of the project has successful experience in building online financial services. He and few other members of board was co-founders of companies like iAM.works and Bilderlings Pay. Mihails Skoblovs, Chief Financial Officer, holds BSc in economics and business administration from Stockholm School of Economics in Riga. Mr. Skoblovs has wide experience in corporate finance, private equity and business development. Co-founder Aristoteles Vargas is a commodities trader working in the area of oil and precious metals with international work experience in continental Europe, the UK and Latin America. He will manage experienced professional traders team. Anton Azamatov, Chief Technical Officer, has 9 years experience in software development. He is a member of Node.js community, and has more than 5 years experience of programming on Node.js. Anton was leading the development of iAW.wallet which was certified by QSA PCI DSS 3.2.