Banks Make Money Off you, Not for You - Unhashed #16

Sean Rach is the co-founder of a not-for-profit finance service platform hi. He founded the platform after having experienced the crypto world while working for 2.5 years with one of the most popular crypto projects, Crypto.com. I reached out to Sean for Unhashed #16 and discussed the digital finance ecosystem and the evolution of the crypto markets.

Let’s delve straight into the interview.

Q1. Welcome to Unhashed. What’s your crypto story, and how did you come up with the idea of hi?

Answer: Hi, I’m Sean Rach, a co-founder of hi. I had a career in digital marketing on both the agency and client-side, working primarily in financial services, and had the opportunity to join Crypto.com in 2017 as the first CMO.

I have a passion for financial literacy and fintech as I believe that too few people have the skills, tools, and knowledge to help grow their money. The use of technology through mobile phones has the potential to be a game-changer for billions of people.

With Crypto.com, I scratched the entrepreneurial itch and dove in headfirst. It was a great 2.5 year run at Crypto.com as we grew from zero to 3 million customers. In 2020, it was time to take a break. During this time, I (re)connected with a number of people, and initial discussions led to working sessions which led to the design of a very basic product.

Q2. Share with us a little bit about the hi Dollar and the hi ecosystem as a whole.

Answer: At its core, hi is a not-for-profit financial service. Many of the original financial services firms were member-owned/powered. Credit Unions and Mutual Aid Societies (insurance) were formed to offer services to members on a not-for-profit basis. Though they were constrained by their membership base (geographic or employers), any profits were used for the benefit of the members either with improved rates or other member benefits. We believe this concept scaled with technology can impact the lives of billions of people.

Secondly, having dealt with the challenge of driving app downloads for customer acquisition, we have sought to make the onboarding to hi as quick and seamless as possible. With roughly 4 Billion smartphones worldwide, hi provides its services initially through some of the world’s most popular social media messengers (currently Telegram and WhatApp) - hi is already on most phones.

And finally, we have sought to reward members for daily interaction with hi (saying “hi” and answering an often quirky question), as well as sharing hi with friends (members earn 50% of whatever their downstream referrals earn). These rewards are locked for one year and released as long as KYC verification has been completed. Thus, there is a strong incentive to do so.

The hi Dollar entitles members to benefit from a growing number of financial services provided by hi. Members will earn great rates, send funds, make payments, and exchange both traditional and cryptocurrencies with no added fees and no markups.

In addition, a tiered membership will allow members to purchase hi Dollars to unlock a range of lifestyle and travel benefits. The hi Whitepaper shares additional details on this as our development roadmap, including the creation of hi’s blockchain - the hi Protocol.

We are roughly three months into our private beta and have been blown away by the growth of our community - just passing 750,000 members! We recently created our membership token, the hi Dollar (HI), and we are ready to list HI on Uniswap.

Q3. Where does the whole digital finance ecosystem stand as of today, especially in contrast with traditional finance sectors amidst a generation of Millennials and Gen Z's who are on top of technological advances within the sector?

Answer: In the current financial system, the people with less money pay more for financial services. Hard-earned income is eroded by fees – from remittances and wire costs to overdraft and ATM charges – while payday loans and finance charges are usurious. They (Banks) make money off you, not for you.

Digital natives have high standards and have been asking questions that many incumbent players have had difficulty answering. Why does it take 3-5 business days for my money transfer to go through? Why can’t I get the Google rate for my foreign exchange - either for notes or especially on my credit card purchases? Why does my bank seem to come up with a new charge every few months?

The answer to these questions is simply - Choices. A profit motive driven by a desire to please shareholders versus their customers causes traditional players to make these choices at the expense of their customers. Traditional banks have been slow to embrace digital, but COVID has accelerated this finally. Neo Banks have pushed their offerings to prove that we don’t need costly bank branches. But their offerings tend to be generally similar to the incumbents, but with reduced fees (mainly due to self-service).

There is a divide between traditional and digital/cryptocurrencies. While banks (due to negative interest rates) offer 0.01% interest on deposits (or in some European markets actually charging for them), the world of crypto has seen the rise of yields on Stablecoins (cryptocurrencies pegged to a traditional currency) produce reliable 8, 10, even 12% per year - much less to mention the growth of Bitcoin itself. Isn’t the ability to grow one’s money something that everyone needs?

We believe that global, open, instant and low/no-cost movement of money will create immense economic opportunity. That everyone has a right to access financial services and to control their money. That the financial services infrastructure should be designed and governed as a public good and advance financial inclusion.

Q4. What are your views on the current Crypto market boom and its volatility, and what role do you think has Digital Finance played in its unraveling?

Answer: Central bankers and ZIRPs have inadvertently been the best marketing machine for Bitcoin and crypto more broadly. Indeed, as the guy that took the meme from Reddit to billboards, the “Time for Plan B” continues to be now.

Granted, Bitcoin has many uncorrelated factors like the tweets of Elon Musk :-) and often, sentiment and regulatory movements are not related to equity markets. But, the growing dissatisfaction with the financial system (as well as the history of all fiat currencies) means the search for alternatives remains a positive factor for BTC/crypto and entrepreneurs in this space.

As for the role Digital Finance played in its unraveling, I think the rise of services like Robinhood and the inclusion of Bitcoin in CashApp and Paypal have increased access to financial markets and crypto. The use of platforms like Reddit and TikTok to share opinions and create movements. In the case of Wall Street Bets, they have played a part in adding volatility, but if you believe in efficient markets, the increased information available to investors ultimately should be a good thing.

Q5. Mastercard revised its cryptocurrency ambitions in a positive step for cryptocurrencies as it expressed its intentions to get involved in three crypto areas- private stable coins. Central bank digital currencies and Bitcoins. From a regulatory standpoint, what are your views on this recent development with respect to Mastercard’s future involvement in cryptos?

Answer: This is obviously a positive development. We agree wholeheartedly with MasterCard - “It’s about choice.” People all around the world are speaking through their actions, and the data from this huge payment bears this out.

As they take steps forward, many of the concerns around the use of crypto for illicit activity have found solid solutions such as the services provided by firms like Chainalysis, which can monitor and screen crypto transactions for such behavior. Hopefully, once solutions such as this are factored into regulatory frameworks, the path for main digital currency adoption will become clearer and smoother.

Q6. Amazon recently advertised a position for a digital currency product lead, causing speculation that the company may adopt digital coins. In this sense, do you believe we are on the brink of seeing widespread adoption of blockchain technology across all industries?

Answer: How could a leading technology company not be looking at digital currencies? Overstock and others may have provided the use cases, but the issue comes back to giving customers a choice. And given Amazon’s customer-centric approach, this should be expected and will drive even more adoption. Consider that Amazon was, for many, myself included, the first e-commerce ever used.

Q7. What new trends are we going to witness within the Hi ecosystem and the crypto industry as a whole?

Answer: Per one of the earlier questions, we have created hi in response to the current “for-profit” mindset in financial services. We believe that global, open, instant and low/no-cost movement of money can and will unleash immense economic opportunity. Globally.

We are in a hurry to find ways to serve our members in ways that we (and they) have always wanted to be served - with no added fees, seamlessly already on your phone, ways to grow your money, daily rewards, and tiered benefits. All of this serves to advance financial inclusion and leverage the power of the blockchain in the real world to help as many people as possible.

Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about innovative Web 3 projects and the crypto space and share it with the community. The writer does not have any vested interest in any of the projects covered herein. Not that this article shares any, but still, taking investment advice from strangers on the internet is not a wise thing to do.