When I asked Evgeni Mitkov, the COO of Everex, how Everex can be used by businesses, the conversation quickly turned into a economics masterclass, not taught before.
Background Trends
In 2008, big multinationals were afraid Deutsche Bank, Citibank, Morgan Stanley, and other banks were going to go under. Realizing that the mandatory insurance on their accounts would not be adequate to cover their money, the multinationals got smart and withdrew the money from the banks.
If you can think of a global brand, you can pretty much assume they have their own bank.
This left global banks with a gaping hole on their balance sheets and a massive revenue loss. Attempting to recoup those losses, banks increased fees for their remaining customers — SMEs and individuals.
Evgeni sees it that “SMEs are already at a competitive disadvantage to multinationals because they have a higher cost structure and they can’t explore every possible arbitrage opportunity. Banks raising fees by up to 10% has only made things worse for the SME. That’s why, since 2008, the biggest businesses have expanded, and SMEs are disappearing at a phenomenal rate.”
In 2016, record numbers of retail outlets were closed — a trend that has continued into 2017. Commonly known as the Retail Apocalypse, the trend has provoked great debate in the financial community as to its root causes, but increased banking fees of up to 10% are helping nobody but the banks.
Accessing Global Markets
With FX volatility only set to rise, SMEs need to be able to take advantage of the global marketplace and the the cheaper pricing it brings without taking FX risks. For example, if a company’s supply chain is out of China, but the Turkish Lira drops in value, making it cheaper to source supplies there, the SME must source from there to remain competitive, but transaction settlement must be nearly instant to avoid large FX fluctuations.
“Businesses need to be global. They need to source supplies from wherever they can find supplies for the cheapest. That’s the game we’re in now. However, engaging in the global marketplace, companies end up with multiple payments in multiple currencies, and all these payments typically go through the banks,” Evgeni stated.
Small Payments
Everex is about small payments. Whether you’re Apple selling the latest iPhone for $1000 or a retailer in London selling a phone top-up for £10, the payments get processed the same way. The transactions are the same. The amount of times the money changes hands throughout the process remains the same.
The same applies for internet transactions. However, if a customer returns something they bought over the internet, it can take up to 21 days for them to receive their refund. It creates a bad impression of the business and the banks reap all the benefits while they hold on to those funds. Furthermore, if a customer uses a card to pay for a car rental, it’s common practice for them to put a hold on several hundred dollars as a deposit. It’s another common practice that it can take up to 38 days after you return the car for the hold on your funds to be removed.
Having your money locked up by the banks speaks volumes about that rental car business. Whatever the bank does, directly influences how customers feel about a product or service. The customer doesn’t blame the bank.
Evgeni believes that “with Ethereum blockchain-based solutions, like Everex, transactions like that are black-and-white within 30 seconds. Hopefully even faster next year. Long waits for fund transfers will soon be a thing of the past, putting customer satisfaction firmly back in the hands of businesses.”
The Technology
When asked about the technology that Everex employs, Evgeni responded, “it’s not like we have gotten a hold of some Martian technology that no-one else has. What we’re using is the Ethereum blockchain and a lot of standard tools. What we’re very blessed to have is a very fast and nimble team that can assemble the solution without all the encumbrance the big institutions have.
“Smart big banks realize that, and they’re partnering with us, saying ‘you can be the person who delivers the solution faster than we could ever dream of doing internally. And we need the solution now. We realize that we’re shrinking the local economy because of our own actions’.”
Everex’s technology allows them to shrink settlement times to 30 seconds hedge transactions on the spot, and keep transaction fees minimal by employing blockchain technology.
Simply put, Everex can make the difference between a profitable and an unprofitable business.
