Breinrock

Make your own bank!

PAUL ORFORD

Exclusive interview with Zoran Radovanovic Founder and CEO of Breinrock

Zoran Radovanovic has forged an enviable career in banking, and has now gone one step further by launching his own Canadian regulated EMI, under his well respected brand Breinrock.

Being a well renowned innovator, Breinrock have designed a solution that can revolutionise the way that your brand navigates its banking needs with ease. Meaning no more multi bank accounts and offshore challenges which can often leads to a huge amount of frustration, and many needless challenges to your brand.

By becoming a white label of the Breinrock brand, this solves all your problems and increases your brand’s credibility in the eyes of your clients.

Most brokerages only dream of becoming a bank with all the kudos that comes with it. However, what if you could make your brand into a banking institution relatively easily, and at a cost cheaper than when you set up your MT4 based brokerage all those years ago?

GC spoke with Zoran to find out more...

Q Can you tell us more about the new product from Breinrock?

We designed this product based upon my past experiences of working with brokerages as they are facing huge challenges now.on the banking front. To have any chance of success in the modern FX brokerage world, you will need to hold multiple licenses, such as Cyprus,Seychelles or wherever.

They sadly are caught in a tough position, as they need these licenses to drive revenue. However. they face huge obstacles with the banks when they look to use their facilities. It is incredibly rare that they will accept all of the offshore licenses that a brand operates under. More often than not, they will tell you that they can onboard your Cyprus entity but not your offshore entity.So this creates for you a number of operational challenges which are an ongoing and frustrating process of opening and closing of accounts. Based upon this, we designed a product where the purchaser of the whte label can go live in three weeks of the contract being signed. This means that the brokerage will receive their own branded payment platform, along with the Canadian license that Breinrock operates under.

So how does this apply for your brand. If you have faced all the challenges that we just outlined, which 99% of successful brokerages have. This means that all the offshore brands of your brokerage can be the clients of your white label, solving all of your banking solutions in just a couple of weeks.

So for example let’s use Game Changers. We could create GC PAY where GC FX has licenses in say Cyprus and all the other offshore jurisdictions. You will centralise all the payments for all of your brands.

Moreover, it makes it so much easier as an organisation and from an operational perspective for all your brands. Further to this, you will also see a huge reduction in costs by having just one cost of settlement, and having all of your payments held in one central location.

Q One huge advantage you have over other EMI’s is the Breintock banking relationships that you have generated over the years. Why is this key to any viable EMI?

This is extremely important for the brokerage, especially for their clients where they cannot ask them to send their funds to a bank in a third world country. It is not a good look. Where we are privileged to be regulated in Canada, we are obliged to hold our accounts and client funds in the banks with the same credit rating.

So for example, where we are Canadian regulated we can hold the money in banks in the United States, UK, Australia or Europe. Most of our accounts are in the UK and New York, such as Coutts or Bank of America. Moreover, we do a large number of Japanese Yen settlements which are carried out by Credit Suisse. One piece of advice i would give is,If you are looking to use an EMI always check where possible to

Q Why is there such a difference between this and say a Lithuanian or Estonian EMI. Ones I have used have alway stressed price entry as a selling point. Can this also be an indicator of quality?

To have your own license is a great step,and I would always advice a brand to get one. However, a different question is are you ready to have one? The overwhelming majority of brokerages do have more than enough capital to obtain their own license in these jurisdictions.

There is a huge difference going into the licensing process in Europe. Tis can be quite a long and drawn out affair, that could take anything from say 9-18 months, During this time you do also need to be fully operational with staff and office, along with a 350K capital deposit. Based upon this, the expenses are quite large, but I think more importantly time consuming.

So from day one to completion you are going to lose 1-2 years in starting to work and becoming operational, and once you get the license there is also a process of 3-4 months in obtaining the Swift codes and IBAN, along with the opening of accounts for your new EMI.

The real beauty of the White Label program, is that it can take 3 weeks to go live and be operational on massively reduced staffing overheads and without the large capital deposit.

Another important factor is the flexibility of the jurisdiction we are under. Let’s look at Lithuania as an example. It operates under the European Central Bank, which they do not allow you to have more than 5% of your portfolio in high risk business.

So if you are an EMI license holder in this region this means that it can only take 5% high risk business. So if you are a brokerage looking to buy a license here, or using one here this can restrict your movement as a business, as 95% has to be low risk so you have to find ways to diversify your risk.

In Canada it is a lot different, the regulator is not enforcing you to not onboard someone from a particular risk profile. What they look to enforce is that you are rigorous with your reporting, anf to properly onboard your clients and their details. We have found them great to work with as they appear to pay the most attention to this aspect of the business, other than the geography of your customer.

In Europe it can be incredibly inflexible with regards to geography. It is one of the key facets of doing business and is very important to them.For example, you will find it very difficult tot onboard a client who is from the Caribbean islands, so based upon this, the White Label solution is great for this.

Q One great thing I found about when we used the WL was that you could show substance prior to going live, it saved us so much money and time. Can you explain how this works?

Canadian law treats the white label exactly the same as a licensed company, the only difference is that a white label is distributing the product of the EMI. In our case it is distributing the payment solution, opening of bank accounts and offers the ebanking solution with their own logo.

This means that the white label is a fully operational company, which is established in Canada, moreover has a contract with Breinrock. Further to this, we also offer a full office with compliance and onboarding in place. This product is designed to make the process as seamless and as fast as possible for both the purchaser and end user.

Q The technology. Is this something complex to use?

Currently we are using leased technology, it’s really user friendly. Everyone can learn to use it very fast. The best way to understand it, it is like a CRM system for those that operate in those terms. There are not too many moving parts, so once you understand how to use it in about one hour maximum.

However, we are currently developing our own payment platform, where we can offer a more niche and bespoke product for each individual purchaser of the white label. We will be looking to launch this in the summer of this year. Moreover, from a licensed perspective we are moving along with our UK FCA license application, which gives us even more access to wider banking solutions. Our end goal is to be able to allow the white label clients to market their solution whether it is FX or Crypto to their network.

This will give white label clients the ability to onboard the client, and have the ability to sell them a CFD product, plus also give the client the ability to use this to pay some bills or whatever, trade crypto all through the e-banking platform.

Q Could a technology company take this on as well, not just an FX brokerage. Afterall, they have a huge network of B2B clients?

From user experience of course. Look at it like this. If you are the user of a brokerage, you don’t really care in many cases where it is regulated. What you care about is the quality of product and

service. Such as, execution of trade and how quick do i get my funds returned.

If you are a broker you do not really care if your client comes from say for example Spain or Argentina, you want to offer him the same high level product. But if you are the bank you care about everything, is this brokerage offshore, can we service them, or which country are the funds coming from. With this we give the client both brokerage and trader the ability to feel safe that they are working in one ecosystem.

Q How can people find out more?

If you are in Limassol you can stop by my office. Alternatively, if you are attending the expo in Dubai I will also be there in May.

The GC takeaway from all this is the following. Sure you have to invest to obtain the white label, however it seems to me that there are so many upsides to this that it is a no brainer. It’s fair to say that CFO’s do not like spending money, but they will also have to look to the future and see a couple of things.

By offering just a MetaQuotes solution, this only has a finite amount of time left in it. You have to adapt your product and make more use of all the data you have gathered over the years to offer your clients a truly holistic service. Moreover, this will add an additional revenue stream to your bottom line which is very easy to manage.

Finally, if you believe that the banking solutions for your offshore entities will get easier, then you are sadly mistaken. Everyday that passes, more challenges come up. With this, no more whack-a-mole with the opening and closing of bank accounts on a daily basis.

It’s time to look to the future...it’s time to look into banking.