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‘Financial inclusion at its best’: Q&A with Amine Chabbi, CSO of ProsperUs

KrASIA 

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After a currency transfer experiment from France to Tunisia in 2021, the central bank digital currency developer is heading to Southeast Asia.


With a team of 15—12 of whom are developers—ProsperUs punches above its weight. It is frequently shortlisted alongside central bank digital currency (CBDC) developers with heftier resources and much larger treasuries and has already developed working digital currency architecture for financial institutions.

As banks all over the world run tests to gauge the viability of CBDCs, KrASIA spoke with Amine Chabbi, chief sales officer of Prosperous, to learn about how digitized national currencies can elevate financial inclusion and find out about the company’s latest developments and plans in Southeast Asia.

The following interview has been edited and consolidated for brevity and clarity.

KrASIA (Kr): What is the purpose of ProsperUs? How did you come to join the company?

Amine Chabbi (AC): ProsperUs was founded based on the simple fact that with the advent of DLT [distributed ledger technology], digitization has become unstoppable in certain areas. DLT solves intense pain points in emerging markets. It has an elegance by design that promotes the greater good. The fine-tuning that is available for transparency in any exchange of value makes DLT very compelling in some use cases.

Prosperous began with Walid Driss [CEO and founder], who I met in 2018, when ICOs [initial coin offerings] were all the rage. We were both entrepreneurs, and he was working on the early stages of what later became ProsperUs. The core idea is that we can develop DLTs that have some level of decentralization and respect privacy but still abide by regulations. I joined ProsperUs in March this year.

Kr: How were you and Walid Driss working in different directions?

AC: In 2018, policymakers and the public sector, in general, were extremely averse to anything that resembled DLT. I wanted to go the fastest route—start on public transparent blockchains and then build something that provides privacy. Walid believed in taking the route of higher utility by building directly on a purpose-built distributed ledger.

He was right and I was wrong. CBDCs are the epitome of what can be done when you build on the level of the distributed ledger instead of doing it on the frontend or app level. The level of integrity that this can bring is commensurate with considerations of national security and sovereignty.

Kr: How does this relate to emerging economies?

AC: In much of the emerging world, moving from a cash-only economy to a digitized currency is akin to leapfrogging landline development and going straight to smartphone proliferation.

There are 2.6 billion adults in the world who have not been part of any digital transactions. One-third of them have bank accounts, such as a postal bank account, where they deposit and withdraw cash, but have not used it for functions like remittance.

This leapfrogging is financial inclusion at its best because it isn’t some form of subsidy targeting people who need help. It levels the playing field for all economic actors in a balanced way, and the central bank can determine how its monetary policy reaches the real economy.

Kr: Tell us more about how CBDCs can be a way for central banks to propagate monetary policy.

AC: Look at what many economies have done in terms of quantitative easing [purchasing long-term securities to increase the money supply, encouraging lending and investment]. Even in economies that were reputedly stable, with low interest rates and favorable environments, little to nothing of those effects reached the real economy measurably. It’s a structural shortcoming. When there are few financial institutions as conduits for the central bank’s monetary policy, there’s no way to control how deep the effects go in terms of reaching the general population.

CBDCs have the potential to “enlarge the pie”—without disrupting the existing economic fabric—by improving access and the affordability of digital transactions. This also benefits large banks but as a second-order effect of the resulting prosperity.

Kr: How do large banks benefit from the implementation of CBDCs?

AC: CBDCs don’t turn the tables on existing financial institutions. Unlike some megatrends that we have seen over the past few years, such as the gig economy, CBDCs are constructive.

CBDCs can reach remote communities, rural areas, and disenfranchised people. As I mentioned, they can bring 2.6 billion adults properly into the financial system. Also, there will be unprecedented gains in efficiency. There won’t be a race to build infrastructure to provide benefits at scale.

Kr: When we hear the term “CBDC,” our reference is China, which has conducted many tests for its digital yuan in major cities. But considering that Alipay and WeChat Pay are so widely used, CBDC pickup has been limited. Similarly, many emerging economies have widely used payment apps. How would ProsperUs work with banks to overcome that usage habit and introduce CBDCs?

AC: There are two factors: microservices and open APIs.

The challenge is even greater when it comes to banks because the switching costs are so much higher. For many banks, the core infrastructure that makes a transaction possible is cumbersome. It’s oftentimes old, with layers of engineering built over decades. The challenge to lead and support those operators is huge.

The core is the most interesting part for big players. The reason why you associate CBDCs with China is because the political will behind this opportunity is a bit tame in most other places. Policymakers and regulators don’t feel pressure from existing actors to consider CBDCs. For banking oligopolies like those in many emerging markets, the switching costs don’t improve margins.

In China, the biggest banks are state-owned, so there is no conflict of interest. There’s an alignment of public welfare taking precedence over private sector interests. There are also national security considerations with respect to regional transactions. China has an invested interest in establishing regional transactions that do not depend on the US dollar.

Kr: ProsperUs recently ran an experiment that moved money between France and Tunisia. What was the purpose? What was the outcome?

AC: Out of our team of 15 people, 12 are developers, so ProsperUs hasn’t done much marketing or business development. We were commissioned to conduct the first production-grade e-euro experiment for Banque de France, with Tunisia as the destination. We completed the life cycle of a digital Euro, tracking it from creation—called minting—to distribution to a wholesale bank, then to retail, cross-border transactions, and finally destruction—called burning.

The important thing to note here is that this was a production-grade digital euro. It didn’t just take place in a sandbox. Real money—and real value—was transferred.

We’re the only company without a nine-figure valuation that can do this.

Kr: The experiment was a success. What’s the next step?

AC: Our technology can scale in an extremely flexible way. This is because our architecture allows us to customize it, improve it, and even adapt it to a certain workflow or regulatory environment. That’s the next step.

Kr: You’re looking to enter Southeast Asia. Which markets are you considering and why?

AC: Southeast Asian economies have a specific position in the world. There are unique opportunities for leapfrogging—and challenges. This region is where the pain points that ProsperUs solves are the most intense.

There are indicators in Malaysia, the Philippines, and Indonesia that show people in these countries are early adopters of anything that improves economic welfare and spurs economic growth. We’re looking for partnerships because we aren’t expanding the Silicon Valley way. As I said earlier, we are not disrupting. We’re accelerating everybody.

Kr: Vietnam and the Philippines recently said they’re seriously examining the viability of CBDCs. Part of the motivation was to displace Chinese payment methods such as Alipay and WeChat Pay, which have been gaining traction within their borders. Since these two countries have sovereignty conflicts, there’s a political dimension to this.

AC: And capital control issues as well.

Kr: Right. Would these political dimensions impact how you approach central banks? Or are you purely looking at the aspect of broad adoption?

AC: We’re focused on adoption at scale, but we can’t ignore other considerations. One of our biggest challenges today is that there are countries where CBDCs are seriously considered for public usage but there is still widespread corruption—which you cannot have with CBDCs. When we show the transparency that CBDCs can bring, even if it’s not an open, totally transparent DLT, and when we show how immutable the records are and the integrity against tampering, sometimes the business development relationship fades away.

Additionally, CBDCs enforce capital controls and curb the gray economy, even for disenfranchised people whose only way to earn a living is by operating in the gray areas. When it’s cash in hand, the person in front of you is the only choice you have.

But digitization offers a net gain even for gray economic operators because the pie becomes bigger—they can gain access to price discovery mechanisms and no longer need to depend on wholesale operators who might put pressure on them because there are no accessible alternatives.

If you consider apps like WeChat Pay, people use it because it adds tremendous value for them. They can access so many more goods and services. The government and banks cannot reach that point on their own. That’s why we’re confident that we can see wide adoption. We are building these tools to reach a goal that is beyond economic and financial objectives, and we can reassure stakeholders—not just the state—that they can integrate with the existing economy.

Kr: Do you ever encounter resistance from banks because they might be hesitant about using blockchain technology?

AC: In what we do, there isn’t that kind of negative connotation. We never say words like “bitcoin” or “blockchain.” We are careful with the words we use.

Meanwhile, banks in emerging markets hear about us from pristine sources. Banque de France issued a 20-page report that describes what we did for them.

Kr: How would you describe the process of designing and delivering a digital currency?

AC: A currency is probably the most distributed form of a country’s sovereignty. In most countries, it’s even more distributed than a national ID. There is absolute faith in the little banknote that you’re holding to retain its value.

Now consider the scenario where a country is invaded. There’s a run on the bank. Once the dust settles, perhaps months later, how do you prove that transactions took place? We need to cater to the national security consideration.

A digital currency needs to be high-performance and cost-efficient.

The secret sauce to this is for the product designer to give up control over the product. We can protect IP and have revenue models with high growth, but we must accept that after we hand it over to a country’s central bank, then it’s not our baby anymore. There is an obligation to build architecture so that the central bank is not dependent on us because we’re a private company.

Kr: At the same time, ProsperUs is a startup. You need to continually generate revenue. How do you do that after you deliver a CBDC if the bank is not dependent on your team?

AC: There are only three companies in the world that have the same maturity as our products. Between those two, the smaller one has raised more than 30 times the amount of capital that we have raised, but they are not ahead of us in terms of product maturity. We all end up on the shortlist for RFPs of central banks.

ProsperUs offers a multi-year guarantee to central banks, so there is full transparency on the fees they will pay for five to seven years. They need this visibility. We offer a subscription model, but that’s just to perform maintenance for central banks.

The only thing we are adamant about is protecting our IP.

Kr: You’re looking to raise a Series A investment. Can you tell us more about that?

AC: We are a pre-revenue startup. To raise a Series A round in 12 months, which is our aim, we need an equity bridge—a pre-Series A, if you will. We have major customers knocking on our door that are multinationals the size of small countries. We need to bulk up the team not only in terms of tech and tech support but also increase our tech team’s headcount by 50% to 70%. We also need to hire more people for the business development team so we can manage institutional customers. It takes six to 12 months to land one customer in that area.

We have 15 people on the team now, and we want to have 30 in six months. We aim to deliver at least USD 1 million in annual recurring revenue in 12 months. This will also depend on key partnerships in the geographies we mentioned earlier [Malaysia, the Philippines, and Indonesia].

Kr: Has the crypto meltdown created a higher availability of talent and made your recruitment easier?

AC: Absolutely. There is plenty of talent that we need to acquire, and they’re kind of beat down now by the meltdown. At the same time, we recruit people based on their attitude, not just their skills. What we do can impact hundreds of millions of lives. We can’t have people who are not aligned with that agenda. We’re not idealists, we’re not romanticizing this in the slightest bit, and we still have a duty towards our shareholders who are betting big on us to create value for them. But we have to recruit the kind of crypto geeks who are ready to make an impact.

Kr: By referencing the experience of ProsperUs and looking into the future, when do you expect to see true proliferation of CBDCs within a country or region?

AC: The dynamic is political and socioeconomic, so it’s difficult to imagine a near future where countries align. Each country has a different set of priorities and its own agenda. Our duty as a technology enabler is to be ready for anyone with the willingness to act. If there is a government that says they are ready to make the change next month, then we must make a push and increase our team’s size and do everything else we need to do, because we need to seize that once-in-a-lifetime opportunity.

If we consider Indonesia, implementing a CBDC in places where there aren’t bank branches would already create massive change in people’s lives. There are millions of people who are in remote areas with no access to any financial services.

At the macro level, if CBDCs replace just banknotes alone, that’s USD 5 trillion—so for all other currency transactions, the change in the level of welfare is incommensurable. Think about the enforcement of rules against the financing of crime and corruption.

In my opinion, every country needs an open, progressive strategy for adoption over a decade to phase out non-digital transactions and establish a standard for the country to create positive outcomes for the entire nation.

KrASIA is a digital media company reporting on the most promising technology-driven businesses and trends in the world’s emerging markets.

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  • 海外业务并不好做。

    消费电商

    元气森林出海隐忧

    2022年06月07日08:41 PM