According to Gregor Arn, CEO of Verso, your company may not be in the payments business, but a payment company will eventually get into your business. Prophetic or not, time will tell.
Verso is a decentralised financial product marketplace that connects DeFi to traditional finance. He came up with the concept during his business tenure in South Asia and the Philippines, after starting Wallet Engine which has been one of the founding partners of Verso. There is a world of difference in the way the West and Asia perceive the importance of small value payments. According to Gregor, Asia overall is way more open to innovation and trying new stuff in the domain of finance, which is why so-called super-apps are becoming the norm in Asia and not yet common say, in Europe.
Today Gregor talks about the business case behind Verso and his motivation for building a product that rests on a blockchain.
“Let’s say you have stored $10 and you want to put the $10 in a piggy bank so that it generates some returns.”
With Verso, you can put $10, $20, $50 whatever it is into a separate product right from your preferred e-wallet. And you generate the yield on that and you may have more, in a week or in two weeks, depending on how long you can wait.
“Micro finance is a tremendous opportunity and it is important for millions of people around the world, specifically in emerging markets.”
When I say micro finance, I’m really talking about, let’s say, a three-day travel insurance to insure your luggage. Or I’m talking about an instant loan of $100. I’m talking about these products that are very useful on the spot right now, right then and there. The challenge with a lot of these products is that they are very difficult to bring to the consumer. If you are an insurance company, if you are offering a three-day travel insurance, the margin you make on that product is so small that you can only scale if you can reach many people. And a lot of people today are using digital wallets, they’re using mobile banking apps.
To integrate with all of these financial products individually is a massive overhead and very complex, and we are not even talking about the regulatory aspects. All these great products and all this degree of innovation cannot be brought to the consumer, because of the complexity involved with the distribution. That’s what we solve with Verso. We’ll basically leverage the blockchain technology to remove all the intermediaries and create the platform where an insurance company or a lending company can create a product on the platform. Those products will get further distributed to users with different e-wallets, with different banks in different countries, in a very scalable manner.
“Verso is built specifically for the regulated industry.”
E-wallets and the banks that connect to Verso have a high degree of confidence that the products they receive from Verso have been vetted. Let’s say we have an insurance company or a lending provider that wants to offer a micro-loan of 50 dollars. That lending provider creates a product on the Verso platform and says the product is an instant loan. Those 50 dollars will get distributed to everybody who is between twenty-five and twenty-nine years old, who live in this and that country. The process resembles placing a Facebook ad in a way that you can set your criteria on who can see and use the product.
Before the product is available for e-wallets and banks to download, there is a validation process. This validation process is also carried out by licensed companies, and they validate a couple of things. They validate that the product is legit, that the company that is offering the product is licensed to offer that product, that the provider is licensed to also offer it in specific markets, but also that the product is labeled according to all the standards that are set out by Verso.
You can’t, for example, create a lending product that turns out to be an insurance product, or vice versa. It comes down to transparency and applying the standards that Verso sets in order to instill confidence with the regulated industry. It is a reputational business. Hence it is important that the platform provides a certain standard and confidence to all the participants. And the benefit for the regulated e-wallets and banks is that they can pick from a range of different products based on what they are comfortable with.
“Verso hosts microfinance and micro-loans from traditional financial service providers”
On Verso you will also find products from the DeFi space, like a peer-to-peer borrowing, peer-to-peer lending products, or yield-generating products. An e-wallet provider for example, that is operating in a market that is more open towards DeFi, can retrieve these products and offer them to its customer base. But if you are an e-wallet provider and you’re a bit more hesitant, you might just want to stick with the centralised finance regulated products first, and then maybe you want to start with one type of DeFi product, and maybe you want to first roll it out only to a few users. So, it really leaves the degree of adoption to the e-wallets based on their roadmap.