BKN301 - May 2021

San Marino’s first neo bank leveraged by blockchain

DIGITAL REPORT 2021

SAN MARINO’S FIRST NEO BANK LEVERAGED BY BLOCKCHAIN

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Chief Executive Officer of BKN301, Stiven Muccioli, named his FinTech start-up to reflect its European location - 301 marks the year San Marino was founded - and BKN - draws on the word blockchain which is a critical component of the digital platform.

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Stiven Muccioli, Chief Executive Officer at BKN301, reveals how blockchain technology is driving FinTech in the emerging market of San Marino

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anking-as-a-Service startup couple of years we can improve a lot on BKN301 will reach a value of transactions and customers and we dream €1 billion within three years, to reach a value of €1 billion in the next is the bold prediction from three years. the Founder and CEO of the “I sold my company Ventis at the end of Republic of San Marino’s 2020 for a very good deal and decided to first neo bank which was launched in come back to my country where I can now March 2021. bring my experience and skills to drive this Chief Executive Officer of BKN301, new startup FinTech business,” said Muccioli Stiven Muccioli, named his FinTech who launched the bank with Federico start-up to reflect its European location; Zambelli Hosmer and Luca Bertozzi. Hosmer 301 marks the year San Marino was was former CEO of PayPal in Italy and founded and BKN draws on the word Bertozzi was former CFO of Ventis (Iccrea blockchain - which is a critical component Banca Group). of the digital platform.

Muccioli was also inspired to return to San Marino-born Muccioli has returned the emerging market of San Marino - which to his home country after 10 years is landlocked on all sides by Italy - due to following a successful career as an investor the fact that although it is not a European and tech entrepreneur to launch the neo member state it is permitted to use the bank which provides embedded financial euro by arrangement with the Council of services and token issuing services with the European Union. Another bonus is that a B2B model. He sees this as the first of it’s granted the right to use its own designs many as his aim is to open on the national side of the FinTech banks outside the euro coins. constraints of the European Muccioli is using Union and in emerging blockchain technology to markets from central Asia drive the FinTech bank but to North Africa. faces challenges converting Despite the challenges the traditional population faced by the COVID-19 of San Marino, one of the pandemic, Muccioli aims world’s smallest countries to reach a fast growth with a population of 33,860, for BKN301. “We want to to convert them from STIVEN MUCCIOLI double our revenue during brick-and-mortar style of CHIEF EXECUTIVE this year and in the next banking to a neo bank.

OFFICER, BKN301

“BLOCKCHAIN IS A HUGE NEW OPPORTUNITY AND A NEW SCHEME OF IT ARCHITECTURE”

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DID YOU KNOW...

BANKING IN THE SPOTLIGHT:

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Could you summarize the major changes that increased digitization will bring to banking?

Could you summarize the major changes that increased digitization will bring to banking?

“I think digitalization will bring about the closure of a lot of branches which will mean a lot of employees could lose their jobs. It’s a huge political and a social problem for the entire financial ecosystem - not only for banks. We need to rethink the future of finance and the future of payments because we need more technology and innovative systems plus we have to think about the people who work in this business,” said Muccioli.

“We would work with other FinTech companies and telcos. If I am thinking of our customers, the best could be telecommunication operators, banks in other countries and software companies with a huge amount of customers with payment needs. This is because we can help increase the revenue and have more frictionless transactions. The best for us is to have customers, clients and business clients with a lot of customers and a lot of payments.”

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He cites the use of blockchain and bankas-a-service as two of the most disruptive innovations in banking during the past year.

“Bank-as-a-service allows corporates, that are not banks, to work in the bank business.

It is a very new thing but it is possible to share banking services and mobile banking services without having the physical branches.

Blockchain is a huge new opportunity and a new scheme of IT architecture. I think these two trends are the biggest in the banking business during the past 12 months,” he said.

Muccioli outlined the three key strategy points of BKN301 which includes the following:

STIVEN MUCCIOLI TITLE: CHIEF EXECUTIVE OFFICER COMPANY: BKN301 INDUSTRY: NEO BANKING LOCATION: SAN MARINO

1 | Payments improvement Firstly filling the gap vs the market standard, secondly leading innovation, addressing cross-border customers though tha BaaS. 2 | Product customisation and new business model Enabling new services and integrating new technologies in order to create a high quality customised product.

€740mn Transaction volume

€1bn

predicted value within the next three years

EXECUTIVE BIO

3 | Incremental revenues streams Improving financial services and being able to generate new revenue streams, thanks to a broader and international approach to open banking APIs and blockchain.

Tech Entrepreneur and investor.

The Financial Technology Report awarded him as one of the Top 25 CTOs of the world in the FinTech industry and he was selected as one of the Top 150 FinTech Leaders and Influencers in Italy. Founder and CEO of the Bankingas-a-Service startup BKN301 and the Venture Capital firm SM Capital.

Founder of Ventis, Fintech company sold to Iccrea Banca Group and co-founder of the multi-awarded SportTech startup Golee and the sustainable fashion startup KNIIT Milano. He founded Libertas, the first widely used news App in the Republic of San Marino and founded and later sold the e-commerce company Tippest. Early investor in SpaceX and Palantir (NYSE: PLTR) and Angel Investor of the Founder Institute of San Francisco, the world's largest pre-seed startup accelerator, based in Silicon Valley, through which he invested in startups like Realty Mogul, Andalin and MallIQ.

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TOP FIVE SOLUTIONS OFFERED BY BKN301 BKN301 offers white-label and API-based payment solutions including:

M-WALLETS LOYALTY PROGRAMS REMITTANCE SERVICES

“ I THINK THE PANDEMIC COULD BE AN OPPORTUNITY FOR US DUE TO THE CHANGE IN BEHAVIOR OF PEOPLE AS THEY MOVE TOWARDS DIGITAL PAYMENTS, AS CASH IS NOT THE FUTURE FOR THE BANKING SYSTEM”

PEER TO PEER PREPAID AND CREDIT CARD PROGRAMS

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STIVEN MUCCIOLI CHIEF EXECUTIVE OFFICER, BKN301

BKN301

2021

BKN301 was founded in 2021

San Marino

has a population of 33,860 and is one of the world’s smallest countries

301

the year the Republic of San Marino was founded

Balance of innovation and tradition and know-how inside of our company Muccioli admitted it is not always easy from other countries and also from our to introduce white label and API-based country. Our main challenge is to grow as payment solutions into an emerging a team inside a small country and inside economy - especially the financial ecosystem when you will be the first which is very traditional FinTech bank operating in and not so dynamic and TARGETS San Marino. not so innovative as a FOR BKN301 “It's very challenging platform,” he said. because the banking Local banks BKN301 will offer system of our country is Telcos white-label and APIvery traditional and not Utilities based payment solutions digital. Our main challenge Transportation from M-wallets (a will be to connect our companies virtual wallet that systems to the traditional Retailers and and stores payment card banking systems of our players that needs information on a mobile country. We then want financial services device), loyalty programs, to bring great innovation, to feed their remittance services, peer to bring people with customer's needs to peer and prepaid and the huge experience credit card programs.

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DID YOU KNOW...

WHAT IS BLOCKCHAIN?

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Blockchain technology is being used to drive the service platform - based on international payment schemes.

Formally, blockchain is a digital mechanism to create a distributed digital ledger where two or more participants in a peer-to-peer network can exchange information and assets directly without the need for a trusted intermediary.

Records are unchangeable, timestamped, encrypted and linked to each other in blocks; each block is a cluster of about two thousand transaction records grouped together. The ledger grows as participants transact.

But informally, what does that definition mean? According to a report by Gartner it can theoretically do business with an unknown partner located anywhere on the planet and trade any asset at any transaction size and not need a lawyer, a bank, an insurance company.

Blockchain combines existing technologies and techniques into a novel architecture composed of five elements which include:

1 | DISTRIBUTION Blockchain participants are located at a physical remove from each other and are connected on a network. Each participant operating a full node maintains a complete copy of the ledger, which updates with new transactions as they occur.

Nodes are the machines owned or used by participants and equipped to run the consensus algorithm. Any participant can review the ledger but cannot change it except under prescribed circumstances.

Created by Hamed from the Noun Project

2 | ENCRYPTION

Blockchain uses technologies to record the data in the blocks securely and semiCreated by Pascil Bom anonymously as participants from the Noun Project have pseudonyms. The participants can control their personal identity and other information and share only what they need to in a transaction.

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3 | IMMUTABILITY Completed transactions are cryptographically signed, time- stamped, and sequentially added to the ledger. Records cannot be corrupted or otherwise changed unless the participants agree on the need to do so. Such an agreement is known as a fork.

Created by priyanka from the Noun Project

4 | TOKENIZATION Transactions and other interactions on a blockchain involve the secure exchange of value.

The value comes in the form of tokens.

Created by Philipp Petzka from the Noun Project

5 | DECENTRALIZATION Blockchain network information and rules for how it operates are maintained by computers, or nodes, on the distributed network. In practice, decentralisation

means that no single entity controls all the computers or the information or dictates the rules.

Muccioli said: “Blockchain is super secure because when you send information or a transaction from one point to another point everyone can see it and it is not possible to hack or stall the data - it is super clear and it's open.

“It will bring about a huge change in behavior and infrastructure because with blockchain you don’t need third party infrastructure. You don't need Visa or MasterCard. It's possible to send cash or money from one point to another point without any other player in the middle. It's very strong for efficiency and for safe transactions,” he said.

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Disrupting traditional schemes of payments with Blockchain | Stiven Muccioli | BKN301

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“BLOCKCHAIN IS SUPER SECURE BECAUSE WHEN YOU SEND INFORMATION OR A TRANSACTION FROM ONE POINT TO ANOTHER POINT EVERYONE CAN SEE IT AND IT IS NOT POSSIBLE TO HACK OR STALL THE DATA - IT IS SUPER CLEAR AND IT'S OPEN” STIVEN MUCCIOLI CHIEF EXECUTIVE OFFICER, BKN301

Post-pandemic opportunity in long-term The COVID-19 pandemic has been responsible for the migration of more people to digital banking services which could benefit the launch of BKN301 as it moves forward.

“I think the pandemic could be an opportunity for us due to the change in behaviour of people as they move towards digital payments as cash is not the future for the banking system. I think in the long term, it could be a good thing for the business but in the short-term, it's not so easy for us because there are not a lot of digital transactions as people spend less money. It's not a super strong moment for the business but I think in the long term we'll be fine.

Focus on emerging markets “Our key message is that we want to grant access to financial services to emerging markets and to people that are not allowed to enter into the financial system right now.

“San Marino is one of these emerging markets because we don't have payment systems, we don't have Apple pay, we don't have Google pay and we need to grant access to these kinds of services and mobile payments and digital finance,” said Muccioli who pointed out BKN301 is looking to extend into Eastern Europe, central Asia and North Africa.

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