The Asia InsurTech Podcast spoke with Gregor Arn, the CEO of Verso Finance about how Gregor’s career and his experience as a consultant led him to the founding of Verso Finance and Wallet Engine. Gregor discussed emerging trends in insurance and InsurTech, specifically the potential for parametric insurance with blockchain technology.
Check out the transcript of our conversation below:
Michael Waitze 0:04
Hi, this is Michael Waitze. And welcome back to the Asia InsurTech Podcast today we are joined by Gregor Arn, did I get your last name correct? Did I pronounce it correctly? That is perfect. The CEO at Verso Finance. Gregor, it’s great to have you on the show. How are you doing today?
Gregor Arn 0:21
I’m doing very well. Michael. Thank you. How about you?
Michael Waitze 0:23
I am superduper. And just for me, where are you based? Right now?
Gregor Arn 0:27
I’m in Indonesia right now, actually in Bali.
Michael Waitze 0:30
Oh, you’re killing me in Bali? Can I hang up?
Gregor Arn 0:33
And it is raining or pouring down?
Michael Waitze 0:37
I want to learn more about living in Bali. It just sounds so interesting. Okay, what do you think? This is an insurance and InsurTech show? Right? But what do you think is the biggest trend or emerging trends in insurance and InsurTech? In Asia, let’s say or in even in the world,
Gregor Arn 0:51
I think generally. So maybe let’s take a little step back. Go ahead. Enjoy insurance is not cool, right? Like nobody wakes up in the morning to buy an insurance product.
Michael Waitze 1:01
Wait a second, I’m gonna push back. And I’ll tell you why. Because a lot of people love to say this. But I don’t think so. Like I think if you’re an actuary in a way, the more I learn about this, the more an actuary feels, to me like a bond trader, right? Like some guy or gal that super cool that sits on Wall Street and is trading bonds, like it actually runs a book, they have a position, they take risk. They’re doing all this cool math. I think it’s super cool to be in insurance. And I think that we’re moving into an era. And I’m not arguing with you. But I think we’re moving into an era where people are like, wait a second, I didn’t even know how cool that was. But go ahead.
Gregor Arn 1:35
I agree with you. It is cool to be in insurance. And that’s why we are in insurance. But it is not easy to sell insurance. Ultimately, you need to sell it to a consumer, right. And I think that’s where we see one of the biggest opportunities in insurance for the years to come, I wouldn’t necessarily say to make it cool and sexy again, but to make the whole purchase flow of an insurance product much more seamless and less complicated than it is today. So today, most insurance is sold by agents, via broker networks, etc. And everyone who has ever had a, you know, an insurance claim, you would know that it would take weeks, if not months until you have your money back for the damage that that you have incurred. And I think nowadays with the technologies we have, and specifically with opportunities coming from the blockchain space, there is a lot that we can automate in this entire process. And so what we envision, really, and that’s probably we get to this a little bit later, where the value of blockchain comes in reinvasion that, you know, a consumer buys a product as part of any other user journey. Let’s say you buy a flight or you buy vacation, or you go somewhere and you have an add on protection you purchase. And if data proofs and data is available that you encourage, you know, like additional cost or damage, a lot of loss or whatever it is bonds are in your wallet before you know it right. So you do not even have to make a claim. We call this parametric insurance. Yeah,
Michael Waitze 3:08
we’ll get to that too. Parametric is something that’s super interesting. Before we do that, can we just back up a little bit and get some of your background? I just want to understand how you got to here and why you care. And I’ll tell you why. I don’t think anybody can be great at something unless they care about what they’re doing. And I want to understand why you care?
Gregor Arn 3:25
Yeah, that’s a very good question. It was actually, my background naturally is not in insurance. So I’m not an insurance person. As a matter of fact, my background is in is in consulting. I did a lot of large scale system implementation projects for s&p 500 companies back in the days, but then I realized like, while I was traveling, that my real passion is in payments. And I was like actually back in 2013, like almost 10 years ago, and I started the company and social payments space back in the Philippines back then we were basically building wallets, embedded wallets. So that’s that’s where, where my passion lies. But what happened along the journey is we were approached by insurance companies and some older financial service companies as well. Because more and more insurance companies realize that in order to sell specifically micro insurance in emerging markets you need to connect to all wallets are an excellent launchpad for insurance companies to sell the products especially the ones that you buy at Oak on the go, and it’s called a disbursement headache.
Michael Waitze 4:32
Why is this unique to this region? Other words, why did you notice this when you were traveling? Why do you notice this here? Why is the wallet so important for this process?
Gregor Arn 4:40
Maybe let’s take a step back when I moved into this wallet space that was around 2013 20 1314. There was a time when you did not have that dominance of the super apps that you have today, like the Wii chats and the likes. That was early days. What you would notice at that time is that a large amount of young people in countries like Philippines, Indonesia, Vietnam, you name it. They’re spending hours on their phones every day, on apps, on social apps, on messengers to stay connected with friends and family, etc, etc. But at the same time, the payment infrastructure was extremely fragmented in this market. A lot of people did not even have bank accounts. You know, like less than 20% of people in the Philippines had even a credit slash debit card. So all that ecommerce standards that we have in our hand in Europe and North America, they are just not there in emerging markets. And that’s where I really got like, into this space, because I asked the simple question. I mean, if these people spent hours on to stay connected on the phones every day, why can’t they also use the same tools to send money to one another? Just $1? Yeah. And it is so extremely complicated, right? So essentially, wallets picked up that space digital wallets. At the beginning. Nobody really liked them. Because of wallets at that time, they were associated with like spending money. And it’s not something that was super exciting. And I think if much value add to people, it’s a lot of these societies were still cash based. Yeah. And you know, if you’re like, let’s say you’re an average person on the street in these emerging markets, it’s quite a hurdle to actually put your real cash into a digital form into an app that you don’t know. Right? Right. So there is like this big trust element that that you have to kind of overcome.
Michael Waitze 6:42
Yes, I guess is the money still mine? Is it yours? Can I use it somewhere else? Can I take it back? Like, do we think and I hadn’t thought about this until we started this conversation. But do we think that the term wallet is maybe the wrong word for this? I don’t know.
Gregor Arn 6:57
Yeah, it’s a good point. I think wallet is like you’ll ask 10 people and you’ll have like 10 different opinions I think so I some people some people look at wallets, that they’re just holding some loyalty cards. Others consider wallets like an ID element. And then others are considering wallets like stored value in with regulated fiat money, right? And now with crypto wallets, our self custody wallet, so depending on who you speak to, it may have a completely different definition. But I guess what’s important just to come back to the to your question on insurance, all of these wallets, they gradually played a more central role on people’s daily lives. Maybe you started off to use the wallet for purchases. Then the wallets enable you to receive money from your cousin or friend that lives abroad. And maybe nowadays, these wallets are actually a major income source for your small shop or your business. Who knows right? So a gradually became a central point in many people’s lives. And as such, you could almost see these wallets as the as the launch pad or as the springboard for additional financial products. Life insurance
Michael Waitze 8:11
I want to give you I want to give you a personal example. And this was about two years ago, must be maybe even more, I can’t remember. I’m a tech guy. I’m a geek, we talked about it before we started recording, unapologetic about it. I’ve always loved technology. So it’s not like I’m afraid of new things at all. But I hadn’t been using digital and mobile banking. And I just signed up for it. I downloaded the app and did whatever. And then I was having lunch with a buddy of mine. And he was like, I’m just gonna pay with my credit card. I’m like, Ah, I don’t have any cash on me. Can I go get some cash? And I’ll give you the half for this bill. When we get the cash and he was like, just transfer it to me. Like, what does that mean? He goes, I’m gonna give you a QR code. Scan. You can give me the 1000 baht now. And I literally I remember just thinking like, Okay, if that’s possible, what’s not possible? What can I use this for? And you’re right. Once you have that epiphany once you feel like, okay, the money is mine. It’s there, I can use it, I can move it, I can receive it, I can send it I can do all this stuff with it. Now what else is possible that I can move in zeros and ones. And that was just an epiphany for me. Anyway, go ahead.
Gregor Arn 9:14
Yeah, yeah, absolutely. I found in all those years now, that you know, it is not just a question of technology, or regulation. It is also a question of psychology. If you especially especially if it’s about money, right? If if you put your money in some box in a wallet or whatever you want to call it, and you don’t know what you can use it for. Or if you can take it back then it’s just a very difficult journey in terms of adoption. It’s kind of there. We’re kind of there. If you look at crypto today in so many ways. You know you have a lot of solutions now that are fairly simple, even for non crypto natives to purchase some crypto currency or crypto assets with a credit card, you can do that today, it’s fairly simple. But try to try to go the other way, right to convert it back to fiat money and take it back into your bank account. It is not straightforward. And if you are, specifically, if you’re new in this space, you first have to figure it out centralized exchanges, and then you have to, there is a lot of steps involved. And that’s not conducive to new users, right. So and we have to, we have seen this before, you know, when we, when we entered the wallet space back in the days, and that’s still true. Nowadays, in most cases, a lot of apps actually in the app stores, you know, they sell you those in app beams and points and coins and stars, and whatever it is. And Apple charges that nice 30% tax on it, of course. But even if you give them away within the app for the recipient, it is not possible, in most cases to convert that back into tangible value in the real world. It stays within this app ecosystem. And that is a major hurdle when it comes to all this more or less, or fiat money, or even crypto to some degree. Now.
Michael Waitze 11:19
Yeah, I want to give a real world example of this idea that it’s all it’s about psychology as well, I love this idea of it’s a question of psychology. And here’s my example, I live in Thailand, I keep a certain amount of money in Thailand. But I also have an account in Japan and I don’t have access to it on a regular basis, just because I haven’t said what’s the right word, my digital access to it, right? I can get somebody who’s in Japan to send me money to here and every now and then I asked them to do that for me, just so I feel like I have that money. Does that make sense? Even though it’s mine, and it’s there, but you understand what I mean? I can’t see the numbers there. And I just want to have it so I can feel like okay, that’s my thing. And I think it’s the same for a lot of people online, right, is that if they don’t feel like they have tangible access to it, they don’t feel like it’s theirs. They feel like it’s gone.
Gregor Arn 12:01
Correct. And you know, that’s a very interesting topic now that you touch. If you don’t see it, you don’t feel it. There is also a risk with that. Let’s assume that you are really living this digital life and all your money is digital, you access it through your wallets and banking apps. What if they’re offline? What if you have no connectivity? You cannot pay, right. And I think the big difference in the traditional world, if you had banks, you have branches, you can walk up to them, right? You don’t need electricity or anything. And I think this is going to be something that’s very interesting. Also, from an insurance perspective, and specifically parametric insurance. If your cloud infrastructure is down, or electricity is out, I mean, we’re a business that can have significant impact in terms of revenue sources, if you can’t sell anymore. And I think this is a complete new area for a lot of products in, you know, across the board payments, insurance products that actually address this new type of risks that people want protection from.
Michael Waitze 13:05
Yeah, I mean, again, in the United States, not to put too fine a point on it, right? Let’s do it in reverse. In China, you have Singles Day, right, which is what November 11, billions of dollars trade on that day of goods and services. And United States Black Friday is the biggest shopping day is the day after Thanksgiving before Christmas. Massive I think it was like $10,000,000,000.09 point something billion dollars traded on that day. And if the internet’s down, or your connectivity is down to your cloud is down or your wallet is down, that can’t happen. And if that doesn’t happen, what happens to all that value that didn’t get created? Is there a parametric insurance solution to this where the service is down for a specified amount of time it’s verifiable based on third party analytics, and you receive a payout, not a full payout, right? If you can make the case you’ve lost a billion dollars on that day, no one’s gonna pay you a billion dollars parametrically. It’s not just going to show up in your wallet, but you may get 100 million bucks, you may get 10% of it right. And that 10% can keep you going until the rest of your indemnity part of this gets solved. Right. So this idea of parametric into para indemnity is a term I like to think about is where I think parametric becomes really powerful, as well as a bunch of different use cases. But that’s the one that I think about, particularly in the context of what you said business outages and sales and online stuff. Yeah,
Gregor Arn 14:21
yes. And as a matter of fact, there are a few projects we’re working on that we are also involved with, are so we are talking to a partner actually to build a parametric product for cloud doubt. So it is something that is going to be it will take some time. But it’s definitely going to have a lot of application in the time to come. And, and that’s where the beauty lies with decentralized setups, you have data is available, data is available. What you need to do is you need to connect it to the insurance providers to the risk carriers, you need to connect it to, you know, ultimately to the Want to restore, verify? But everything is there today.
Michael Waitze 15:04
So where does decentralization come into this part of the conversation from a
Gregor Arn 15:07
data capture perspective? So the data source could be a public source, it could be different data points that, you know, let me take a simple example right? On top of my head, yep. Let’s say 1000. People run a little script on their computer. And they ping a certain website ran at random times every day. And if these 1000 programs report that a certain website is inaccessible, yep, during a given time, yep. Then you’ll have crowdsource data. So to say, it’s not one data source, it’s multiple data sources that say the same thing. It is on the blockchain, it is available, it’s verifiable. And you could use this to trigger a claim disbursement. That doesn’t have to be any human involved in the whole journey. And that’s where a lot of these Yeah, I guess, decentralized opportunities lie, you will still depending on the product, you know, like because we are in a regulated space, depending on the product, you do need humans involved, right. But not every product is a regulated product, in some cases, like a flight delay, protection and rights, an example is something that’s very, very simple and straightforward.
Michael Waitze 16:18
So what kind of process do you need to put in place to make sure that those 1000 people that are pinging a particular website just based on your example, right, that they’re actually telling you the truth? Do you know what I mean? In other words, is there a distributed ledger technology, a proof of work or proof of stake is zero knowledge proof that’s possible to run mathematically against that to say that we trust these people and that as soon as they fall out of trust, they become not part of that decentralized data gathering that you’re doing? But they just get ostracized and don’t get used anymore? Does that make sense?
Gregor Arn 16:51
Yeah, totally. And I guess that’s the that’s a big question that decentralization needs to address. Right? I mean, if you get like on any blockchain, if you get a majority of a node validators to work together against the rest, then yes, you do have issues. And but that’s actually what we tried to solve with decentralization, ultimately. But I think, to your point with data, I mean, today, where are the data feeds coming from? They’re coming from Oracle providers, you have some big ones out there. Yeah. I mean, how do you know,
Michael Waitze 17:22
sorry, for people that don’t know, can you just define what an Oracle provider is? Yeah, it’s
Gregor Arn 17:25
basically simply called it’s like a service that takes data that is available anywhere in the world, like flight data as an example. And that can be used by smart contracts or smart contracts, use that connect to that data and then trigger certain certain actions. But you don’t know where that data comes from? Yeah, you know, and that’s actually something that is, especially in the financial service world is more and more, I wouldn’t say an issue per se, but it’s demanded to have more degrees of identification on who provides and is responsible for the data source. And it goes as far as having data providers that are KYC. So if I were to tell you to use the example before, if you have, like 1000 people that you know, are responsible to submit the certain data on a daily basis, these people are identified these people similar to note, validated or operated, these people provide a certain amount of collateral and they get, you know, they would get, quote, slashed. If they provide false data, then yes, I think you would be in a very, very similar space that I mean, decentralized system is in today.
Michael Waitze 18:36
Do you worry sometimes, look, we can make a case that this new technology hasn’t found any great use cases yet? I disagree with this. But you and I aren’t the target audience for that argument, right. But do you worry sometimes that the shenanigan can re for lack of a better term that’s been happening even recently in the crypto market, which is separate from what you’re discussing, yeah, somehow overshadows what happens here, and that it creates a longer runway for the success of this technology, because people are like, I’m not using anything associated with X, because X is a scam, even though the technology itself is awesome. But the people that are using it to do bad things. First of all, it’s not decentralized. If you look at the problems that are have been have, it’s not decentralized, super centralized, right. And it doesn’t even use the stuff that you’re talking about. But you worry sometimes that like, the recent stuff that’s been happening, gets in your way.
Gregor Arn 19:25
Absolutely. It is that the recent events definitely set back the industry, probably four years. It is, again, we are when it’s about money you are whether you want it or not, you’re in a trust business. Definitely. You need to restore that trust and that confidence with consumers. And I think this is something that yeah, we have to address as an industry in general to move things for what it is. There is a lot of upside Yes, and a lot of products and a lot of benefits, ultimately from the technology. But I also think in a way it’s part of evolution almost right. It’s part Out of every innovation and process, it’s not perfect from the get go. And you need to have these type of let’s say battle tested events or or events that make a new technology battle tested or a system to to get to that point where it’s really the right one for for MAs.
Michael Waitze 20:16
Do you think like if you go back historically and look at let’s just talk about the development of Wall Street, right? I’m really curious about your opinion on this, because of the way you framed the recent events. In the old days, right before there was a New York Stock Exchange, people would just like trade on the street on Wall Street. Like that’s why all that stuff happened on that people just stand outside. And I think that if you if you had the same type of real time, like webcam, focus on what was happening back then that would have taken 40 more years to get like Wall Street to be a thing because everyone would have just been like, wait a second, that’s a scam. This is a scam. This is terrible. That’s horrible. Where’s all that stuff gonna happen in the dark? I’m not saying it should happen in the dark. But we need to figure out a way to analyze stuff in real time and not dismiss it immediately if one thing goes wrong. Does that make sense? I’m simplifying a little bit. But you know what I mean, right now fully
Gregor Arn 21:01
agree. I mean, the road is not, it’s not a straight road. It’s a bumpy road with a lot of challenges. Yeah.
Michael Waitze 21:06
So talk to me about versa. Where does versal fit into this whole ecosystem?
Gregor Arn 21:09
Yeah, so Verso is essentially helping traditional insurance companies to expand or to add capabilities to their value chain a using decentralized technologies and, and blockchain in particular, so I’ll give you a few examples. If you look at the insurance value chain, basically, you’ll have like, you know, cite from the research and all of that, but you have like the underwriting piece of products, you have the distribution piece through the agent, networks, brokers, etc, to get it to the consumer. And then you have like the whole claims management piece that’s coming after that. And in all of those three areas provides specific value that is connected to parametric products. So as an example, from an underwriting perspective, new risk models could be underwritten in a decentralized way by everyone. Today, underwriting insurance products is something that’s very interesting financially, but it’s restricted to big funds, like you and I will not be able to put our money into an underwriting pot sort of say, right, so that’s one area in the underwriting piece where you were decentralized, finance could play a big role. And just one thing to add here, just important, this, again, is a regulated activity. So versal is helping and enabling that, but we are also working with partners to make it happen.
Michael Waitze 22:30
Right, the only point I was going to bring up is if you go back and look at the history of insurance, it started in the way you’re suggesting. So if you go back to the cafe, where like Lloyd’s of Lloyds started, there were just a bunch of people that and I’m simplifying again to make a point, right? But if you go back to this little cafe, where like, mariners would come in, and wealthy people were having tea, and they were like, wait a second, you want to go to the Far East, but that’s expensive. And what if your boat sinks and all this other stuff? Here’s 10 grand for me and five grand from her and six grand from them. And we’ll pull this together. And we’ll make sure you’re okay. Over time, of course, it needs to be regulated to protect people from bad things happening to them. But you’re right, there’s a massive amount of capital out there that could make this whole thing way less expensive to do if you could tap into it in a way that wasn’t problematic for individuals, right? Correct.
Gregor Arn 23:22
Yes. So I think underwriting is one area that we are looking at, that’s very interesting, specifically for new type of risk products that are not yet you know, or maybe even from an experimental point of view, where traditional insurers may not, you know, underwrite the product yet so you could use the defy to basically create small underwriting pools and test the product, the new product out, etc. But then the next piece where we where we really also come in is the distribution piece connecting these insurance products and plugging them into the user journeys. So give you an example there, we are talking to a travel company, providing different like flights and hotels, etc. And the idea is that when you sell let’s say you purchase a weekend getaway with I don’t know, your wife, your girlfriend, your best partner. And it’s a really beautiful hotel you pick, you have something to celebrate, and you spend a lot of money on it, but then it ends up just raining the whole weekend. So you could actually spend a little bit more extra on the start of the checkout journey for that trick. You add weather protection, and then if weather data shows that it has rained over a certain amount of time or over a certain rainfall like in terms of you know, inches, you have your money in your wallet. Without the claim oh that type of upsell opportunities for protection is what we help with as well. Specifically when you when you purchase these trips with crypto sets. And then the last piece where we come in is in the claim disbursements. And that’s where a lot of opportunities lie. So we talked, we touched on that earlier. So automated claim trigger data sources, verify data sources, they just, you know, trigger the claim disbursement process, and you have funds in your wallet without needing to do anything. But the easy example, there is always flight delay insurance. I know it’s a product that everyone uses to explain things. But it’s, it’s actually, if you imagine your book and flight and you’ll miss your connection, as an example, there could be a lot of additional costs coming to you. Because of that, you may have to stay overnight or, or maybe it’s just a matter of a few hours, and you end up like having dinner at the airport. But today, even if you have flight delay insurance, traditional insurance, think about how you get the money. Like you won’t see that money, even if you get $50 around it, because you won’t see it for like two months, probably not even worth the effort to make that claim, right, because you have to read through the paperwork, fill out the forms. But here’s the parametric comes in. So your flight lands, and it is so much late that you will miss your connection, that can be old, that can all be predefined. Yeah. And that means before you actually set foot in the, you know, into the terminal of the airport, your funds are in your wallet, and you cannot spend it at the airport. So it’s like that is where where a lot of opportunities come in using this, you know, parametric opportunities in the decentralized way. What does
Michael Waitze 26:46
it look like from your perspective, from versus perspective, trying to do this kind of what’s the right word, Value Chain Innovation, right picking pieces out of the value chain and saying we want to fix this, we want to fix that we want to connect this. But you can’t do it alone, right? You need to do it with incumbent insurers because that’s where all the money is. And that’s also where all the the excusing where all the policies are. What’s it like trying to convince them in little bits and pieces to be able to do this with a new company? Yeah,
Gregor Arn 27:15
that’s a very good point. And you know, to be very honest, like when we moved into this space, we underestimated this, by far, really, it’s like a lot of traditional insurance companies they are, you know, this is a topic they are interested in, we have various conversations, but from conversation to action is taking a lot of time. And to say the least, and especially now in this market, and just quickly want to connect to your earlier point, in terms of you know, the current environment, we have a trust, a lot of insurance companies, they have big names. And as a matter of fact, not just insurance companies, any big corporate has a brand has a brand equity, right. And you don’t want to be associated with something that you don’t know will work, or wear or like, let’s put it another way around. You don’t want to be associated with something where you know that it’s like a lot of scammers in the space. Yeah. And all of a sudden your name gets pulled into something that you don’t want to be associated with. So it is normal and totally understandable that there is a certain hesitation to move forward with this new, untested products. And for us, it’s proven to be challenging, because we do want to build, we do want to move forward, we go to want to bring products out, but you can’t do it alone, as you said. And that’s the challenge of being a b2b play we did now, although, despite all that we now did actually, you know, put unity despite all these recent events, and this is just something super, super new that we want to focus on for the time being. So I think these persons is actually a much bigger topic than we thought. Yes, claim disbursements can help a lot for insurance companies in terms of reducing overhead and automating payments and, you know, etc. But the process if you really think what this means the process of moving funds into a destination wallet, irrespective of what the trigger is. That process is relevant specifically now for crypto in general. It’s what we call off ramp, you know, if you take your meta mask, or your self custody wallet, and you want to move those funds into your local Fiat wallet, let’s say or into bank, your bank account, it is not straightforward. You send it to an exchange first and you convert it to fiat then you have to trigger a withdrawal process and then it takes you know depending on your country four to five days until those funds in your local bank account. And remember you offer them to pay a bill or something. You don’t offer them for fun No. So you have to keep logging into your bank account to see until the funds arrive. And then once they arrive, then you make a payment. And all that journey is essentially something that we go through as part of claim disbursements. But if we can make this available for people to use as an off ramp channel, and essentially automate all the steps, and not going by exchanges from from a user journey perspective, that is there is a lot of a lot of opportunities there. And yet, it’s something we want to test now, it will definitely be interesting to see what happens. And it’s something that we can control. We don’t have that dependency from, you know, from threat fi in the same way that we have with partners that we have been talking to. I’m not saying we won’t talk to them anymore, that those conversations are still going on. But the reality is just the way the market is at this point that at all the unsold fake questions, the industry is not going to move quickly. And yeah, and we are here and we want to do something. So that’s that’s what we’re going to focus on
Michael Waitze 31:07
20 something years ago, and you’ll see where this is connected. Some drugged up dude tried to light his shoes on fire on his way through on his way to boarding a plane. And in a way it’s forced all of us to like take off our belts and take off our shoes. I travel in flip flops now because it’s just 1000 times easier. And I laugh at people that like untie their wingtips when they’re trying to get on a plane. It’s like what were you thinking before you got on? But the point is that it changed the behavior of an entire industry. And I feel like one of the issues with banking in the finance industry is that to them, everybody looks like a money launderer. Right. So when you add another step, which is going from crypto into Fiat, now it really feels like oh, you wouldn’t be in crypto unless you were trying to launder money, which is patently not true. Right. So what do we need to do to get to a place where just that additional step? Well, first of all disintermediate other necessary steps, right? Like there’s this idea of like an on ramp and off ramp to this out of the O thing should be anathema to the whole process? Right? If you really want it to be seamless and frictionless. None of that should be necessary. It should just happen. Yeah. But before that, what needs to change to make it so that everybody doesn’t look like they’re laundering money?
Gregor Arn 32:20
Well, I think if there’s a lot of there’s a lot of elements to that, I think we do need to have certain clarity in the regulatory area now. To which which will go a long way to, you know, to provide or reinstate that trust or confidence into this crypto space in general. But he doesn’t need, he doesn’t need a certain degree of regulation. We have seen this now with recent events, but I think it’s, you can even take it a step further. And we’ve said this before as well. It is also about consumer protection in general. So that means, you know, like, yes, code is law. And, you know, there is like there’s all these apps that you can try out, etc. But there is absolutely no protection. I mean, if I’m in traditional finance, if I’m selling you something, you have certain consumer protection, there’s consumer rights, there is like a lot of things that, that help people to not, you know, to not get scammed, and also in terms of education to understand what you’re actually buying. But in crypto, that is not the case, you can purchase a service or a product. And oftentimes there are no terms. And if it doesn’t work, you know, like, okay, too bad. Our code was, you know, not mature enough for the product. Sorry, not our problem. So I think there’s a lot of things that need to happen in the space that is not just regulation to prevent the big events that we had in the recent months, but also more generally to protect everyday consumers from services and products they consume into space. Do you
Michael Waitze 34:10
think that like some of the big insurers are kind of splitting themselves into two big camps right into really bifurcated camps, where one is just like, we’re gonna try to keep doing stuff that way. We’ve been doing it because it works and it’s profitable and stuff like that. And then other incumbents who think, you know what, we’re gonna make a technology bet on this. And that those are the companies that are easier for versatile work with.
Gregor Arn 34:31
Yes, that’s a very clean, yes. I mean, we are now you know, we are moving much faster with small companies that are just actually focusing on this specific niche. Right. So we are like, what is the example I mentioned earlier? With the electricity or cloud downtime, protection? That’s something that we are actively pursuing right now. And we are like, it’s we are three companies that are collaborating on this same opportunity, and they’re all super small. And yes, it does need that, that, I guess. You cannot be like big and you know, flexible at the same time. It’s just I mean, maybe you can to a certain degree, but never as fast as a small team can be,
Michael Waitze 35:19
which is harder. And it’s all your stuff
Gregor Arn 35:20
API first. Yes, we are purely b2b. So we are just do you
Michael Waitze 35:24
think we wake up? Because look, small companies are definitely going to be more nimble than bigger companies just by definition. But at some point, if they’re way more nimble and more innovative, right, they can actually get bigger because the small insurance companies access to capacity. Right? If they’re building good products, if their loss ratios are in line and all this other stuff, there’s no reason why they can’t grow, and then why they can’t grow exponentially? And do you feel like, there’s a way that this type of technology and this type of innovation can help them grow to a point where they then become the leaders? And then we wake up in 10 years? And what we consider to be incompetent shores? Are companies we hadn’t heard of today?
Gregor Arn 36:01
Well, I don’t have to Crystal Sure.
Michael Waitze 36:03
I don’t either. But you know what I mean, right?
Gregor Arn 36:05
I think that’s not going to play out that way, I believe it’s going to the two worlds are coming together, threat fi and device coming together slowly. But surely, what I see happening is that, like companies like us, and others in this space, we find our way where we work with traditional insurance companies, they have to there is definitely a win win in this for everyone. Right? I mean, we can bring capabilities to track five that they do not have, right. But on the other hand, that phi has, like the regulatory experience trekfest licensed for for, like, you know, and they have existing relationships as well. So it’s, it’s something that is, in my view, a true case for Win win. But we still have to do a little bit more work, in defy and crypto to really get to a product that does add value to threat fi in their existing business case, their business model.
Michael Waitze 37:02
Do you think that some of this testing and maybe already doing this, right, but what’s the implication of having a sandbox in a particular country or in a particular region that says, You know what, we’re gonna let you test this thing at scale with really big companies. And it’s kind of regulatory approved, but again, because it sits in the sandbox, the tests are smaller, but still valid? How does that work for you guys?
Gregor Arn 37:20
We haven’t gotten to that point just yet. But yes, it’s definitely something that would be super exciting. I mean, we did see large scale products in the parametric space, or we do see them out. But they are literally in two categories. All the large scale products you have today are either stuff like that would be for government back, let’s say for for natural disasters, these type of parametric products are out there. But you don’t have much on the small, commercial side or even personal side, very, very little. And to test that in a restricted environment is something that will be super exciting, even if it’s just for a particular market or user group. But yes, you’re definitely right. That’s where also the collaboration comes in with threat five, yeah. And something that we have been talking, as I said earlier, as well, but it’s just taking time. And unfortunately, it’s not in our hands how to define the priority on the agenda item for the threat by insurers.
Michael Waitze 38:28
Do you feel like one of the things that you’ve learned by building your own company is that and I’m talking my own position, in a way, right, but I’m just curious, from your perspective, do you feel like surviving is half the battle? You know what I mean? That if you can just kind of Outlast everybody, obviously, out innovating people is super important too. But if you can figure out a way to just Outlast people that overtime, you know, the markets moving in your direction, but you want to be there when it gets there, if that makes sense. Right? So timing is actually super important to know.
Gregor Arn 38:55
Absolutely. Like, yeah, absolutely. That that was also the case when I when I started with, you know, moving into the payments and wallet space back in the day. So we wanted to build it was literally to work even now is kind of, for us as a startup as a nimble startup. There’s two options, either you can wait until the time is right. And you, as you say, you go through it. And you’ll be you’re persistent. Or you also are very open for the opportunities that present itself. Yeah, I mean, now we could either we could just wait until insurance is more receptive, again for crypto in general. Or we could see if we can tap this opportunity from your friend space. And I think those are the choices that you have. And I have at least from my experience, I can say the best things happened unexpected. And, you know, you start off with a venture with an idea and what you end up building at the end what makes it in the market is rarely the exact same that you started off with. Yeah, I guess this is just part of the journey.
Michael Waitze 40:06
Does that surprise you in the building? You know what I mean? Because it surprised me this idea that, like, I have a concept, I want to build that concept. People are going to enjoy this concept, you start building it, you go out to try to sell or to convince people do the right thing. And they’re like, stuff that would be better if it were just a little greener kind of thing. And you’re blue. You know what I mean? Like any kind of thing you’re like, Hmm, I don’t think so. My favorite color is purple. Like it’s just gonna be purple. And they’re like, Okay, and then you start changing over time, and you end up with this purple thing that you never decided you were going to build. And then everybody wants it to me.
Gregor Arn 40:37
Yeah, absolutely. I mean, it’s a progress, right? Yeah. I mean, everything is the progress the progress.
Michael Waitze 40:44
Okay. I’m gonna let you go Gregor Arn the CEO and Verso Finance. Thank you so much for doing this today.
Gregor Arn 40:49
As a pleasure to be here. Thank you, Mike.
Podcast: Play in new window | Download
Subscribe: Google Podcasts | RSS
