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Despite cross-border payments expected to reach $40 Trillion globally by 2024 per Juniper Research, these transactions can still be unpredictable as latency, fees, and policies add friction across countries, currencies, and payment categories. The other major issue is that regardless of this growing surge of global money in motion, the World Bank reported that at the start of 2022 there still remains 1.4 billion people considered unbanked globally who have little to no access.
It is important to report though that there is a new breed of cross-border financial innovators and innovations developing that can move money in nimble new ways by seamlessly bridging the worlds of fiat and digital currency. These new approaches and technologies are able to reduce settlement time, slash costs, and optimize settlements, while offering new levels of compliance, transparency, and access.
To learn more, we were introduced to Adam Swartzbaugh, CEO and Yunus Sevimli, CTO of Almond FinTech – a B2B technology company with a mission to increase worldwide financial inclusion. Almond is creating global money transfer and alternative credit scoring tools making financial services more affordable and accessible to people around the world, regardless of income. Through their multi-blockchain, cross-border, transfer protocol and risk assessment platform, they remove financial barriers and empower everyone/everywhere by equipping financial institutions with the tools they need to expand their customer base to the unbanked/underbanked and help their customers thrive in today’s increasingly interconnected world.
Hortz: What are the specific problems and issues you are addressing with your global, money transfer technology platform and credit scoring tools?
Sevimli: There is a crazy dichotomy that exists behind this question. I mean, when you physically travel abroad, you can experience how we can get our bodies around the globe relatively quickly, but we are not able to do the same with our money. I can get on a plane from Boston and be in Singapore in about 24 hours, door to door. But if I send a transfer from a bank in the US to Singapore, my money gets there, if I'm lucky, on a Tuesday, maybe Wednesday. It is crazy to think about how we can get our bodies to the other side of the globe, whereas the ones and zeros that make up money and accounts take so much longer.
Oh, by the way, we lose a lot of money in the process because we pay fees to all these intermediaries along the way. These losses hit people who rely on receiving that money for a living the hardest. For family members abroad sending money back home, migrant workers supporting their loved ones, international students who need money from their parents, this is a matter of livelihood and necessity. So, in broad terms, this is the problem we are solving for: How can we get money to travel internationally - quickly, affordably, with minimal losses, and high security?
Swartzbaugh: Without question, the legacy technology involved definitely needs a great deal of work. There is some broken infrastructure currently being used to move funds around the world. But what I would add is answers to the questions of So What? and Why bother?
The main problem we are solving here is a lack of economic mobility and financial independence. If you trace most any social issue far enough upstream, you will often run into the same thing. What we have embarked on with both of these tools - the transfer piece and the credit scoring piece - is the most essential and impactful solution to provide equitable access to affordable financial services across the globe, to everyone, everywhere. At the end of the day, that is why we are here.
Hortz: Let us look at your money transfer process first. Can you walk us through how a transaction from a client sending money from one country travels through your network to a person in another country? What is your proprietary tech system, the Settlement Optimization Engine (SOE), designed to do through this process?
Sevimli: We are a technology network provider that connects licensed financial institutions across the world, across different countries. A key component of our transfer process and network is that we use digital currencies and their underlying blockchain technology as a way of moving value around the world more efficiently. We do that because digital currencies are becoming more globally ubiquitous and accepted by both individuals and regulators. Their total trading volume is also going up which makes them a good bridge asset to move value from one country to another.
We do not have an alliance or are limited to a particular cryptocurrency versus another. Our Settlement Optimization Engine looks at these cryptocurrencies and ranks them in order of which digital currency would give us the best results in terms of minimizing the losses in transfer from A to B. Let me give an example. If we are going from a financial institution in the US to Singapore, we look at all the cryptocurrencies available in that particular corridor. Let's say there are 15 of them - Ethereum, Bitcoin, Solana, whatever. Our SOE can calculate how much money we would receive on the receiving end if we did the transfer through Bitcoin versus Ethereum versus Solana, picking the one that would give us the best result overall.
Some parameters that go into this calculation are the rates, the fees, the transfer speed, the volatility, as well as the liquidity available across these different cryptocurrencies. That means we do not keep ourselves locked in with a given cryptocurrency. The result can change on a minute-by-minute basis. We could be sending $5,000 through Bitcoin one minute, and then later on the next transfer, it could be happening through Ethereum. So that gives us a lot of flexibility. We are not affected by the minute-to-minute ups and downs of the market. Also, if a given cryptocurrency is down or just offline, we could quickly switch to a different one providing us a high availability rate as well as resiliency with respect to general market conditions.
Hortz: Why have you chosen this idea of transferring fiat currency into cryptocurrencies to make these global transfers? Aren’t there also transaction fees in all those conversions that are increasing costs?
Sevimli: It could very well be costly, if done wrong. But, let me take a step back. The traditional methods of moving fiat involve a great deal of middlemen, especially if you are going between a more industrial economy to a developing economy. Transfers are usually not point-to-point. The money bounces from the US to Europe to Middle East to Southeast Asia, and at each point, the intermediary institution takes a cut and also adds a delay to the system. And now you are also dealing with the bank holidays in different countries and you do not know whether money is going to be received and how much is going to be received.
We got rid of all those intermediaries and now we have a much more resilient, predictable, and transparent way of going from A to B. As I said at the beginning, if done wrong, it can be very costly, very volatile, and it can be very risky. That is what our settlement optimization engine and proprietary technology accounts and solves for.. Our optimization engine is effectively giving us versatility to move our funds throughout the right pipeline; it is like a big switchboard. It just picks the right path at that moment.
Hortz: Is it fair to say that you almost have to take the digital currency route to escape out of these traditional old rails and leaky systems? Since cryptocurrencies are all built on a completely different blockchain technology “rail system”, do they provide a more efficient and modern solution for global money transfer?
Sevimli: Yes, I would agree with that, Bill. Blockchain obviously has many advantages. It is immutable, so when you send the money, nobody can dispute the transaction. It can be a lot faster. Some blockchains are instantaneous, some of them take a little longer, but it is in the order of minutes and hours, instead of T+1, 2, 3…
Previously, this was not a practical solution as digital currencies were not widespread. But, in the last several years, we have seen a huge push and development of the technology. Blockchain is now an inevitable part of the future, but how we are using it is very distinct.
Swartzbaugh: Single network, single chain solutions run into these problems about cost efficiency when it comes to cross-border transfers, because it is a simple fact that no one network or one digital asset will always give you the best speed, the best rate, or the best reliability at every second of the day, in every corridor between two countries in the world. So, to make this effective and efficient, you should leverage the collective power of all of these networks and assets. And that is really where we are plugged in. So now for the first time in history, they have actually become a reasonable and reliable way to move funds, to move value, around the world.
Hortz: As to the credit scoring tools, why is there a need for alternative credit scoring models and how did you go about developing them so they meet the needs and realities of less developed countries?
Swartzbaugh: The simple answer is that a lot of people in emerging markets may be excluded to some extent from the traditional financial ecosystem - limited access to banking infrastructure. They do not necessarily have the credit history or the data and information needed by banks to understand and evaluate that person's credit profile or create an assessment of their risk to repay. Therefore, you need alternative solutions to evaluate that risk.
Many conventional models rely on historical data that basically indicate their ability to pay, given historical precedence such as cash flow. What we are doing is basically saying, in the absence of that, you can gauge their willingness to pay - what their mindset is when it comes to lending and paying a loan. That is where psychometrics and a behavioral assessment of that individual can give you a good enough indicator as to whether or not they are a good candidate for a loan. One of my favorite quotes from one of our team members is that not everybody has a credit score, but everybody has a personality.
So that is how we ended up with this alternative scoring model that goes beyond traditional credit models and gets into more of a behavioral and psychometric analysis to supplement or replace the absence of existing data.
Hortz: With these two innovations at your possession, how do you add financial institutions and new countries onto your platform? Are there any specific requirements or parameters that need to be in place to be able to partner with different countries and foreign financial institutions?
Swartzbaugh: There are some basic pieces that do need to be in place. Any financial institution we have worked with on either product of ours has a significant interest in innovation and impact. They have a tendency to try new things, to kind of break outside the box and solve a problem in a more meaningful way, whether it is how money flows into and out of the institution or how people are qualifying to receive those funds.
But the beauty of this is that we have also built something that addresses the concerns and eliminates the risks that regulators have identified. So, let us go to the regulators directly and say, here is a great solution that we have built that can improve financial inclusion and provide more equitable access to affordable services. This is generally part of the strategic roadmap for any regulator or government institution dealing with the economy and also key to their concerns.
We just have to collaboratively explain how we address their concerns and risks and show them how we mitigate or eliminate them. It is partly exploratory for them because they want to know how to bring technologies like this to impact, but they want to do it in a safe way where they can monitor what is going on.
The outcome is not just that we get to market in that country and then we extend the benefits of that technology to financial institutions and through them to their beneficiaries. But we are also actually helping inform policy to an extent which is very important for other technology companies who are trying to do very impactful things but are trying to get over these kinds of regulatory hurdles.
Hortz: Congratulations on your recent $7M funding milestone. How will you be strategically deploying this investment?
Swartzbaugh: Two parts to that answer: first, we want to deepen the quality of the technology and the brainpower of what is already a very intelligent and motivated team. Second, expand and scale into new countries bringing these technologies to impact as fast as possible. So, it is really about throwing some jet fuel in the engine and accelerating what we are already doing.
Hortz: What do you see as the possible outcomes and benefits from the technology you are applying to the global money transfer and alternative scoring tools arena?
Sevimli: From a money transfer perspective, outcome goals for us are eventually making money transfers as simple as sending a text message to anyone in the world with minimal cost. We are looking into additional technologies to get there faster. Quantum-inspired computing is one approach we are looking into to speed up the optimal routing calculations. Furthermore, we are currently developing a machine learning algorithm to better predict crypto volatility. I think that is really one of the most exciting things about Almond- the capacity for scale and the capacity to bring in new innovations to solve a global, age-old problem.
Swartzbaugh: This is where we have come full circle. Here is this great technology to do all these things well, but what is the effect on people's quality of life and financial access? We were talking about financial independence and economic mobility at the beginning and this existing lack of equitable access for affordable financial services standing in the way. So, by creating technologies that one, allows you to receive funds or send funds and make payments in a more affordable way, and two, enables people to get access to capital through a better credit evaluation process, we can help by plugging more people into the financial ecosystem. This is kind of what the future looks like when we properly achieve a financially inclusive world.