LakeBanker is a fintech organisation with a mission to bring Free Banking to the World. Right now banking is too expensive, and it fails to reach much of the World’s population. Billions are forced to rely on minimally regulated alternatives often associated with the disadvantaged (loan sharks, pawnbrokers etc). We want to change that. We developed a “Crowd-Banking” business model in which individuals, merchants and other institutions can provide banking services to one another. They thereby bypass the need to rely on the outdated traditional banking sector. We talked in detail about the Crowd-Banking concept elsewhere in this publication (link here). We’re a for profit organisation, but we also have a higher purpose to change the financial world for the good of everyone.
How would you explain to a simple person without any experience in finances what is the uniqueness of your system?
Imagine you want to text a friend telling them you’ll be late for dinner. You open up Whatsapp and click ‘send’. Whatsapp says this will cost £50 and take 2 business days. What would you think? Well, banks are doing this to all of us everyday when we move money around. Bank wires, card payments and international money transfers are all associated with heavy fees and cumbersome administrative burdens. In the UK alone charges made to merchants for accepting card payments totalled around £13 billion in 2016—these costs are passed on to customers. £13 Billion is 0.6% of the entire UK economy and 10% of spending on healthcare. People in the UK pay that much to banks just to pay for stuff with cards. It’s absurd.
What makes our system unique is that sending money will be free, for everyone, forever. This includes domestic and international payments, user-to-user and user-to-merchant payments. It shouldn’t cost more to send money than it does to send a text message or an email. In our system, it won’t.
Your system has been trialed for 1.5 years, and today it involves more than 2,000 users from all over the world, with growing demand. What has been the key to your success?
We actually have many more users than that. Some users just consume banking services from the system, for example, they might use it to buy Bitcoin. Others also choose to earn fees by supplying banking services to others, for example, by facilitating deposits/withdrawals to/from the system or conducting KYC verifications on other users. This is the essence of Crowd-Banking. We call these second type of users ‘LakeBankers’. The 2000 figure is the number of LakeBankers in the Beta trial. These guys effectively work for us, and for themselves. The total number of users is much higher.
Anyway, why have we seen such success? There is huge demand for banking from people left behind by the traditional banking sector. This could be as a result of its expense, its lack of reach into many parts of the world or its failure to provide access to financial innovation, especially cryptocurrencies. Our Crowd-Banking model allows us to easily tap into this demand. We don’t need to build branches or hire salaried employees: Networks of LakeBankers can be created wherever people have access to smartphones. Those dissatisfied or completely ignored by traditional banks can use our system to do things that would otherwise have been impossible or prohibitively expensive, for example, to make small international payments or to invest in cryptocurrencies. This is why we have seen such strong demand.
LakeBanker is open to international investors. Can you please share from which countries the majority of your investors come?
Many, many countries. But we’re especially popular in Europe and South East Asia. It’s interesting that we have many investors from less wealthy countries. Perhaps they understand the problem of the un/underbanked more vividly than the rest of us. From developed countries we get interest from people who recognise our potential to be a disruptive force in the financial world. Many fintech projects fall into two categories: (1) Small patches to the existing financial system; (2) Grand ideas of using tech to make the world better but with little substance or proof of concept. Our case is different: it’s a genuine combination of technology and business, and of crypto-currencies with traditional finance. The concept has been proven over a 1.5 year Beta trial. It has the potential to make a real impact as a sustainable business. Serious investors recognise this.
Recently, you introduce a free (p2p) crowd banking system by launching a token sale. Why should people invest in your token?
We should start by saying that our token BAC is not a security, nor do we recommend it for the purposes of speculation. With that in mind, our investors seem to have a bunch of different motivations: Some are long term players who recognize the strength of our business model and the potential of our token to circulate amongst many millions of users in the long run. Some want to join us in revolutionising banking to improve the lives of millions of people. Some are current participants in our trial version of the LakeBanker system. They want to be part of the coming expansion. Some are professional traders who predict a 1300% profit might be made within 2 months. The current price is 1 ETH = 1300 BAC, while in Phase 2 our auction starts with 1 ETH = 100 BAC. These traders think Phase 2 (in October) is likely to close at that price. This is a 13x profit. So people have lots of different reasons for investing.
Phase 1 of the token sale started on August 15, 2017. What has been the response to your token sale so far?
Very good so far; demand is strong. We decided to offer a small number of tokens at a very low price in Phase 1 to encourage participation and generate feedback before the main sale. That has worked. We got some really useful FAQ’s:
The first is how do we plan to make money if we offer services for free? Well, we offer core banking services for free, especially our free payment options described above. This will attract many, many users. To them we can offer value-added financial services such as peer-to-peer lending, credit lines and insurance. We generate revenue from these services (and we can do that better than traditional banks because of the exceptional risk management our Crowd-Banking model provides). In this respect, we’re similar to some of the world’s leading technology companies: Google does not charge to search the internet; Facebook does not change to access their social media platform. They offer these really useful things for free, attract many millions of users and then generate revenue through value-added services. It’s a compelling business model.
The second is a concern about our Shanghai headquarters, especially given the regulatory uncertainty surrounding financial innovation in China (but also everywhere else). In our case, this isn’t a problem, for two reasons: Firstly, despite being headquartered in China, we’re in fact an international organization with plans to open offices in Hong Kong, London and elsewhere. Our team and advisory board comprise an international group of experts in finance and Blockchain technology. Our potential corporate partners are spread throughout the world. As are our customers. Secondly, any fears about China as a location for financial innovation tend to be based on unsubstantiated rumor and gossip. We looked into the actual evidence: it’s clear that China is a friendly environment for crypto-assets, Blockchain related start-ups and other financial innovations, including Token Sales. The Chinese national government is keen on risk management for sure. But that will be an attraction, rather than a deterrent, to serious investors. If your readers would like to know more about this situation we wrote a detailed article about it. They can check it out here: https://lakebanker.com/blogs/6-icos-based-in-china-a-concern-for-investors.
For people who want participate in your token sale, what should they do?
Phase 1 has a small (2%) cap and it’s not impossible for there to be last-minute problems such as server overload, network congestion or blockchain confirmation delay. So people who want to participate should act ASAP to avoid missing out.
In terms of actually sending payment: the LakeBanker system is a spinoff of long-standing cryptocurrency exchange LakeBTC.com. Their have an impeccable reputation for reliability and security. We will be handling transactions there to give participants great ease of use and the best security. Simply login to (or create) your LakeBTC account and deposit in your desired currency. To purchase tokens, users will need to send Ether (ETH), Bitcoin (BTC) or Litecoin (LTC). When your deposit is ready, click pay and send the desired amount to email@example.com. That’s it.
What is the procedure for joining LakeBanker bounty programs and what are the benefits?
The bounty program is a way for people to earn our token through constructive support of our project. There are a number of ways to do this: Investors that invite friends will get 5% of the BAC tokens they buy as a referral bonus; and users can earn BAC by supporting us on social media, for example by posting constructive Tweets or asking useful questions on internet forums like Bitcointalk.org. Various other avenues are available too: personal blogs about us, youtube videos, articles in news media and so on. It’s a great way to get the community involved and allow them to earn our token. The procedure for joining is available on our site.
After the token sale, what are you planning to do?
The LakeBanker system has been operating successfully in Beta for 1.5 years. Now it’s ready for the world. We will develop our mobile App and through training and incentives hit our initial target of 100,000 LakeBankers. That should allow us to acquire significantly more users through this stronger network of LakeBankers and our free services. At this point we can integrate Big Data analysis into our risk management protocols and begin to offer value-added financial services. In the longer term, we want to penetrate more areas of the World, especially emerging markets. To achieve this, we envisage using accrued profits to distribute millions of free smartphones in areas where they remain unaffordable.
What was the biggest challenge in launching LakeBanker and what have been challenges since?
We cover so many currencies and payment methods, it’s challenging to unify these. That’s why we are issuing a new token BAC to mitigate the problem: it will make the system more consistent and easier to use. Other challenges come from the huge number of countries we cover: it can create problems with network latency and it’s a lot different, languages, cultures, regulatory frameworks for us to deal with. The final challenge is the exceptional demand we see for our services: that requires very high transaction throughput and can create server overload or other capacity issues. Nonetheless, we exposed ourselves to all these challenges during the 1.5 years of the Beta trial. We know how to solve these problems now.
Where do you see LakeBanker in the next two year?
Our Crowd-Banking model has the potential for exponential growth: When we enter a country, just one LakeBanker can service maybe 10 users. The system will incentivise those users to become LakeBankers themselves and earn fees by providing services to others. So those 10 can service a further 100, who can service a further 1000 and so on. After two years, although we will still have few employees in our core organisation, millions of people will be working for us, and for themselves.
See the lakebanker Team here https://lakebanker.com/team
For more information, please visit the LakeBanker website – https://lakebanker.com/
Thank you Thomas Xie, LakeBanker’s CEO for making this interview possible.