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The Connector Podcast - DFS Digital Finance Summit - Jersey's Fintech Frontier: Aaron on Digital Currency Innovation and Next-Gen Compliance Solutions
Join us for an enlightening exploration into the world of fintech with Aaron from Digital Jersey, as we uncover the transformative innovations reshaping Jersey's financial landscape. Discover how this small island is making big waves in the tech industry, with initiatives like comprehensive 5G and one-gig fiber connectivity attracting cutting-edge firms and startups. We'll spotlight Moneybrain, the visionary digital currency company that's breaking ground with Jersey's first digital bank and the innovative digital pound. Their pioneering approach in decentralized banking, supported by real-world asset-backed stablecoins, is empowering consumers with more equitable financial choices.
Our conversation with Aaron further unveils the exciting realm of fintech compliance with Dayzium, a startup revolutionizing domicile requirement management for the affluent. Through engaging dialogue, we highlight the latest fintech trends and innovations that promise to shape the future of finance. Aaron's expert insights offer valuable learning moments, promising to enrich your understanding of this dynamic field. Tune in and stay connected as we express our gratitude for Aaron's contributions and continue to bring you riveting discussions and updates in the world of fintech.
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:Welcome to another podcast here. Live at DFS in Brussels and with me I've got Aaron all the way from Jersey representing Digital Jersey. You have to enlighten us. What do you guys do?
Speaker 3:Yes. So firstly, thank you for inviting us here in Brussels Pleasure it's our first time here and, I hope, one of many. And that leads on to Digital Jersey. So we are a government-backed agency and our role and responsibilities are to grow an alternative ecosystem that's not just reliant on finance, where we can then go into regulatory fintech, medtech, biotech basically being the representation against traditional finance firms, and then growing that ecosystem. And we do that for a number of different ways, and that's through training and development and we have our own holistic Digital Jersey Academy. Away from normal education, we do inward investment, so we look for some of the best companies across the world and go have you thought about Jersey? Is that a place you'd want to register your business and then grow? And the reasons for that is because we're actually one of the most technology advanced in terms of our infrastructure in the world. Got one gig fiber to every single premise, wow, up and down. We are one of only a few nations to actually fully deploy a 5G network.
Speaker 1:A real 5G network. A real, a real 5g yeah, there's two 5gs.
Speaker 3:You've got kind of like the software upgrade which will give you the speeds, um, and then you've then got, you know, standardized ones where it's a complete rip out of the network and a government. It doesn't sound like a lot but for the size of us we've just spent 80 million quid on a on a new 5g network so fastest internet in the world officially and now got a 5g network to to do that. So when you're a technology firm, especially when you're starting out or growing and getting into a world of ai and data, you need quick, fast networks. That's not got contention and number one and I guess aaron you're not alone.
Speaker 2:That's probably the nature of the beast. Yeah, number one, and I guess, aaron, you're not alone. That's probably the nature of the beast. So you're here with a lot of companies and colleagues I saw. So who did you bring to Brussels?
Speaker 3:Yeah, we brought a few delegates with us. I'll start off with Moneybrain. Moneybrain is a digital currency business and what they're specializing there is almost like decentralization of traditional banking and how you and I can then have access to fairer consumer rates. So, for example, bank of England might be charging nearly 6% on their interest rates. Money Brain are completely decentralized from that and, although they have traditional banking methods, they'll use crypto um, or a stable coin, um, so you and I, without being crypto enthusiasts, can suddenly then have a token and it's then been backed by real world assets. So very similar to like how a traditional bank does. You know, money's then backed by gold and bullion, but this is truly digital and because it's decentralized, they can control the interest rates and the fees that they pay.
Speaker 3:So it's then bringing money back to the consumer and more control so you can get digital mortgages at a better rate than your traditional banks. You know you can have loans, things like that. That's happening. Um, one of the other things that money brain does as well is it's not been officially announced is they're now creating Jersey's first digital bank, and that's after a successful rollout of a digital pound. And why the digital pound is important is it's not only keeping sovereignty of local spending, but also, as a retailer someone selling products and you decide to use the money brain digital pounds your Apple can charge up to 3% for that transaction cost Money brain the digital pound 0.01.
Speaker 1:So it's power back to the retailer.
Speaker 3:So again it's about making sure that it's fairer access to money for everybody.
Speaker 2:Aaron, what you're saying is that this is the first CBDC? Then, yes, actually life.
Speaker 3:Money Brain was also one of the first, because of a deregulated environment, where they were able to actually create the first stable coin. Now there has been another claim of stable coin, but actually this can be accessed from outside. You create a stable coin and it's only access from internal of that institution. That's not real access to money. You can download the money brain app now and buy a stablecoin and then spend that how you wish it's. They're one of the first to do it in the world.
Speaker 2:Wow, it sounds like I have to invite you again for some more podcasts, maybe around this topic alone. And and that was one company. Are there any others as well?
Speaker 3:Yep, so this is another one we're really excited about, and they come second in the Slush event in Helsinki a few weeks back. This is called Dayzium.
Speaker 3:They are a fintech startup, and the idea there is that it's about understanding where your dom cell requirements are and if you're a man or a lady of certain wealth, you know, and you're multiple jurisdictions, regulations saying you can only maybe stay maybe a maximum 183 days, 185 days in that country and you have to move again, that becomes a real bugbear in terms of administration. Now you might outsource that to an accountancy firm or you might do it yourself.
Speaker 2:This is complete software.
Speaker 3:You plug into your travel applications and your bookings and it will systematically track when you're in the air, because that's time out. If you're traveling, that doesn't count as your time. So it's maximizing on the time that you're allowed in those jurisdictions and then giving you an evidence-based approach of where you were and when you was. All done through software, so it's again minimizing the admin burden, whether that's through an accountancy firm or you doing it yourself.
Speaker 2:And the need for developing this had this to do with the fact that you're Jersey-based?
Speaker 3:the fact that you're Jersey-based. It's helped in Jersey because of the tax regulations there, like zero corporation tax, inheritance tax and low taxes for an individual as a business. When you compare that to Europe, I mean, your highest rate of tax in Jersey will be 20%, so if Tim wanted to set that business up in Europe, he's having to pay around 40 plus. So having the tax efficiency is there, and then when you're going to start a business, that's then tracking, wealth management and where you're residing for a period of time, jersey has a number of high net worths, so it become a great place naturally to kind of incubate it Two-folded actually, yeah.
Speaker 3:But it's truly global, it's software, so it has no borders. But it was incubated in Jersey and we hope that the European market can adopt that, the US and the Middle East and so forth.
Speaker 2:And I think it's very relevant for the time that we're living.
Speaker 3:Absolutely At the moment.
Speaker 2:Yeah, Was there any other companies?
Speaker 3:Yeah. So another organization that we brought over with us is Toby's startup called Flink. Toby's background has always been around banking not necessarily the retail part, but the private banking and wealth management and he saw a gap in the market where, okay, if you're going to be opening up accounts with cash management et cetera, that that can be quite laborious. So he's got a software now that will be able to facilitate the cash management and the onboarding of that and then be able to that's not for the consumer, that would be more towards trust and fiduciary businesses being able to use that software to give a better user experience and onboarding for the wealth clients that they may be supporting.
Speaker 2:And again, not strange to have that in Jersey because I believe there's a lot of trust companies on.
Speaker 3:Yeah, in Jersey, yes, there is. There's a lot of trust companies, fiduciary and wealth management in Jersey, but the good news with Jersey is that most of those are multi-jurisdictional, so Tim's product is not just for the local market. It's actually got a lot of prevalence within the EU and further afield. So it's a good opportunity there for a disruptor in traditional onboarding of wealth management. And then more importantly, user experience and affordability.
Speaker 2:Opportunity there for a disruptor in traditional onboarding of wealth management. And then, more importantly, user experience and affordability. Yeah, cool. Can you maybe explain us a little bit? Because where does Jersey actually belong? Is it part of the UK? Is it part of the Brexit scenario? Is it part of the European Union? How does that work?
Speaker 3:Jersey is very unique. So, although we are classed as a crown dependency, jersey will be reliant on the UK for armed forces, but we are completely separate. So we're not part of the EU. We are not officially part of the UK, despite the crown dependency, so we're 100% self-governed. So we have our own rules, we have our own regulations. Um, and one of the things we spoke about in this morning's first session around data and regulation was is well, does that make jersey um a place where it's regulated? You know it's decentralized regulation. It's a place where you avoid regulation absolutely not. Um, we conform to other countries datas and we have our own annexes. So we've got gdpr equivalent in jersey, for example, and that's an annex from, from the european ones there. Um, and we're because of the global organizations that reside in jersey as well. We have to conform to global policy and we're really, really proud that we have just finished a MoneyVal compliance thing around financial regulation, anti-money laundering, et cetera.
Speaker 3:We're now voted seventh in the world for compliance and regulation monetization. I'm not surprised, yeah. So one of the first things we said about some of our European cousins were oh Jersey, tax avoidance, X, Y and Z, it's exactly the opposite.
Speaker 3:It's very highly regulated. But because we're so intimate and we are still classes separate, it just means that we have better access to our government, better access to our regulators. So we're hearing from a lot of the challenges that our European cousins are having today around being able to conform to so much regulation around fintech. Jersey has those problems but because we're such a small jurisdiction, we can phone up the regulator tomorrow and probably set up a business meeting where we can facilitate conversations and cut through red tape quite quickly. That's quite unique to Jersey. I don't think anyone in this room could probably phone up the European Commission and ask can we have a discussion on this policy, please.
Speaker 3:Not really. They probably need to put a timestamp in or go. I've made the inquiry. What time can you get back to me please? If you already find the right person to talk to. We don't have those sort of problems in jersey we um, yeah, it's, it's intimate in a polite way, um you can have access to a lot of people.
Speaker 2:Yeah yeah, it sounds very exciting. Actually, um, were there any other companies that you brought, or was it they?
Speaker 3:were just the three. Um, yeah, so we are looking to um, you know, make this more of a reoccurrence for Jersey. I mean, I do a lot of the inward investment, so next year we'll probably want to. You know, one of the companies I'd like to introduce is Easy A, and that's like the dual lingo, but for fintech and web-free and blockchain companies. So what they do there is that you and I can log on to an application and learn basic coding and principles around blockchain, analysis, coding, python, things like that, and then, outside of that, um, eza, then also um, go and work with small and medium-sized um startups, um around the web, free and blockchain companies, where they don't necessarily have the internal staff and structure to have developers. They're expensive, but they're worth their weight in gold. We appreciate that. So they do alumni management with some of the best universities in the world, including Harvard, and then they go to task so that small or medium-sized startup that they're helping will go right.
Speaker 3:We need this. It's not necessarily the first person that's going to finish the competition. It's those that are able to audit their findings and get us there. The winner will then get a grand prize several hundred thousands. That company then has the IP to allow them to grow to the next stage, and then ECA hold a minimal holding stake in that. So it helps feed that ecosystem between talent drain, need development, well, and then brand exposure. So what's your space in EZA? They're coming to Brussels next year.
Speaker 2:Excellent, I hold you on that, on holding that. Well, nice things come to an end very quickly usually, so we're almost at the end of this conversation, but there's a lot of nice things. You talked about Jersey, but what I'm interested in is to understand what maybe are your biggest challenges in terms of fintech and digitalization and so on.
Speaker 3:Despite all the wonderful ecosystem and the ability to get in front of regulators and government. Um, our biggest challenges are very, very similar to the global challenges we have, um, but it's it's maximized in jersey. So challenge number one is talent. Um, rightly or wrongly, we don't have a university on ireland, um, and if you're born in a small rock on the atlantic, you're naturally going to get cabin fever and young people might want to. You know, flock the nest and go and experience the rest of the world why wouldn't you? But there has to be a reason to care to come back.
Speaker 3:So, once you've experienced different cultures and educated yourself off islands, jersey's a very expensive place to live, despite the tax efficiencies, costs of property et cetera. So until you become a middle earner, jersey can be very unfriendly in terms of cost of living. So we have a brain drain. So our best young talent leave the island and we have to find ways of protecting them back. And then, when you want continued personal development, we don't necessarily have the traditional learning infrastructure available to us. So that's one of our biggest challenges there.
Speaker 3:And then obviously that then leads on to the bigger firms wanting real good technical people on islands. We just simply don't have that, so we have to look at outsourcing all the time. But since COVID, that's proved that you can work anywhere in the world, that's okay you can still be as productive. So I would like to turn that on the flip side. You don't necessarily have to be boots on the ground in Jersey to work for Jersey.
Speaker 2:That's a nice ending actually. Aaron, thank you so much for having you. It was an interesting conversation and I personally also learned a lot, so thank you for that.
Speaker 3:Again, thank you for having us. We are really looking forward to the rest of the day.
Speaker 2:Like I am, and thank you also to the audience. Please stay tuned. More FinTech news on the channel. Thank you very much.
Speaker 1:Thanks for listening to another episode of the Connector Podcast. To connect and keep up to date with all the latest, head over to wwwjointhekonnectorcom or hit subscribe via your podcast streaming platform.