Polybius: The First Fully Digital Bank

By Steven Gleiser

Published Jun 2nd, 2017

Updated Jan 15th, 2022

Cryptocurrency

In the Bitcoin age, and with traditional banks offering internet banking services, it would be difficult to think about a fully digital bank being the first in its class. But the key is in the concept. No traditional bank is fully digital even if it offers internet banking. On the other hand, bitcoin doesn’t offer the kind of banking services that traditional banks offer, despite being fully digital. That is exactly the market segment Polybius is targeting. Polybius will become the first fully digital bank, so we interviewed its management to see how they are going to do it.

Characteristics That Make Polybius Unique

Bitcoin Chaser: Polybius aims to build the first fully digital bank, accessible from everywhere around the world. How does this differ from the basic functions that the Bitcoin Network provides for its users?

Polybius: The Bitcoin network, as any other cryptocurrency network, is yet unable to fit completely into regulatory and legal environment so to be completely compatible with, and compliant to numerous laws and directives. Besides that, the Bitcoin network just allows payments. It is other 3^rd party services that offer extra tools like wallets or loans, but the issue of trust is always present with wallets getting “hacked” and people losing all their money.

Inspiration Behind Polybius

BC: Why did you decide to fund the Polybius initiative through an ICO?

PB: The core technology, Digital Pass, is our next step on Estonian eID, which we want to offer to the people of Europe (and hopefully one day – to the rest of the world). We need people to cooperate with us and we need their support to develop a tool which they would be using on the daily basis. Through ICO we are able not to just reach out for investments, but to promote ourselves through a variety of media channels, building up our potential customer base for once the project goes live.

Polybius and Purists

BC: How will you tackle resistance from cryptocurrency purists who will argue that centralizing funds and trusting a third party is exactly what cryptocurrency aimed to change?

PB: We do not consider cryptocurrencies as rivals for 2 reasons. The first of all is the regulatory environment which is not yet ready to fully integrate cryptocurrencies within the global economy. But even once it happens, it would actually mean that we are able to offer more services to the people. You still need wallets and accounts which store your funds and private data in a secure and trustable manner. As we (and not just us, but the FCA as well) saw during the Ethereum fork (the DAO case), cryptocurrencies are not that trustable after all. Being heavily regulated by authorities creates an additional level of trust for customers, meaning that we cannot do whatever we want to and have responsibilities for our actions. Besides that, Polybius is not just a payment institution. Our core technology Digital Pass is not rivaled by cryptocurrency technologies due to several data regulations already present in Europe.

Polybius Banking Fees

BC: How would Polybius’ fees compare to the banking fees of traditional banks, given that all the proposed KYC, regulation and SWIFT membership will be costly?

PB: They will not be higher and in fact, as we abolish front offices and about 80% of costs, we would not require to set high fees. SWIFT and card scheme membership costs will be covered with funds collected during the ICO.

Difference Between Polybius and Traditional Banks

BC: How does Polybius differentiate itself from traditional banks that also offer online banking solutions?

PB: Polybius drives the technology to the forefront of the banking business. Going fully digital brings its benefits such as lower operational costs, faster communication and increased scalability. Expanding to new market areas is also faster and less expensive. Polybius is also not just about banking. It is about identity management and aggregation of payment mechanisms required for the eCommerce.

Polybius and the Unbanked

BC: Are you thinking about financial inclusion of the unbanked at all, or do you think that this is not the role of Polybius? If so, how do you propose to increase the rates of financial inclusion as a global bank?

PB: As the “unbanked” market lies beyond our initial focus, we are not yet ready to make solid statements. We believe that with reduction of operational costs and increase in security mechanisms we will be able to offer services for people who cannot use them at the moment. Being fully digital is also a good feat as in many developing countries there are more people having smartphones than bank accounts.

Decentralized Autonomous Bank?

BC: Will all your corporate structure be decentralized, or will the foundation make all the decisions? In other words, are token holders also voting partners or not, and if they are, what are the limits to their power?

PB: Token holders have no voting power as of now. Offering voting possibilities along with dividends through our Token will make it impossible to host an ICO due to legal reasons.

BC: Will you give account holders the right to vote on critical decisions as well?

PB: No.

Business Growth and the Market

BC: How much do you expect your business to grow within 2 or 3 years of launching the ICO?

PB: In 2 to 3 years we plan to fully deploy our ecosystem in EU-28 countries. More details about operating profit, total revenues and profit for investors can be found in our business model on Polybius.io

BC: How will you market your accounts to the public?

PB: Our marketing has started with our first publication. We believe that as we are going through the ICO and attract more attention, we are also building our future customer base. Our core technology Digital Pass is a unique solution with which we will be creating a new experience for all the people who use the Internet. This will ultimately be a technology to make communications and identification easier, bolstering the development of new digital services and tools.

Polybius Financial Products

BC: Which financial products will you offer to compete with traditional banks? Will you offer better terms for loans and better interest rates for savings accounts? What about investment accounts, like mutual funds or index funds?

PB: Asset management and loans are among the main income sources for classical banks. We believe that through adopting better technologies, automation and digitization we would be able to not only reduce costs and fees, but to increase the speed at which people receive their services. With Digital Pass we will be able to be more confident in every client, inevitably allowing us to get ahead of what other conventional financial organizations have to offer. In short, it is all about scoring, and scoring is all about data.

Views on Ethereum

BC: What do you think will happen with Ethereum over the next 2 to 3 years?

PB: If they manage not to make any forks like they did with the DAO, they will build enough trust to get even wider adoption. I believe that they can repeat the history of Bitcoin and grow over $1000 in price per ETH.

DAO

BC: Where do you stand on Ethereum governance issues in the wake of the DAO hack about a year ago?

PB: We hold the same position as the FCA. What they did was to save their own capital which they lost in the DAO hack. The hack itself is a result of a code fault. It is easy for me to say that they should not have done that, since my funds were not at the stake. Let’s just hope that the Ethereum Foundation learned the lesson and their future projects will be better designed.