The creators of China’s first robo-advisory platform are chasing a $US60 trillion-plus opportunity to disrupt financial services using blockchain and crypto-asset technology.
Bankorus, which was founded in China in 2013 as robo-advisory group MiCai and now manages assets worth more than $US30 billion, is launching a new marketplace for high-net-worth individuals around the globe to access crypto assets, primarily security tokens.
The Bankorus platform securitises assets by creating a digital, tradeable token that equals the value of the asset, with those tokens stored on a blockchain in a smart contract, which is automatically created using the company’s artificial intelligence systems.
Bankorus chief executive Gregory Van den Bergh said the advantages of tokenisation included greater security and liquidity of assets, allowing investors to diversify their portfolios, convert traditional wealth into digital assets, facilitate crypto loans and trade digital assets globally.
The company recently launched its first initial coin offering to raise $35 million, with the proceeds to be used to launch the Bankorus platform and build out the product and the technology.
Mr Van den Bergh, who earned a Master of Business Administration at Cheung Kong Graduate School of Business, said the potential for the platform was staggering, with just $US50 billion of the $US60 trillion held by high-net-worth individuals globally having been invested in crypto to date.
However, he said his experience working at Morgan Stanley and various hedge fund managers in Hong Kong had indicated the desire to invest had not yet matched the actual investment.
“What we noticed a few years ago is that people in China have moved from only buying and selling real estate and fixed-income products, to different investment products like venture capital, private equity, etcetera,” Mr Van den Bergh told Australia China Business Review.
“So, we started building a lot of AI to automate risk management, the whole valuation chain, portfolio analysis, and we noticed that on the AI side we spent a lot of time cleaning all the data and thought that there should be a more convenient way to do this.
“That’s when we found out about blockchain – we use blockchain to store all the data about different assets.
“Then the next step we see now is the necessity for people to securitise their existing assets and create a marketplace, because we see that the tokenisation of assets is really the most transparent and most liquid way for people to hold assets.”
With access to more than 200,000 high-net-worth individuals across China, the United States and Europe, Bankorus has attracted interest from some of the world’s biggest consulting firms, including Roland Berger, Bain and Microsoft.
Importantly, Mr Van den Bergh said the Bankorus platform complied with financial regulations globally, including China’s ban on investment in crypto-currencies.
Bankorus was recently invited by e-commerce giant JD.com to join its AI Catapult blockchain and AI accelerator and is also working alongside Chinese policymakers at the China Blockchain Application Research Centre.
However, Mr Van den Bergh said there was still much to be done to educate the market on the applications of blockchain technology and crypto-assets.
“Crypto is not banned, blockchain is not banned, there is a lot going on in blockchain in China,” he said.
“We have a partnership with JD.com, which is kind of the Amazon of China, if crypto was banned in China they would not be doing blockchain.
“What is banned is the cash crypto – these things are combined but also separate and it’s unfair to see them both as the same thing because it’s not.
“It’s not buy bitcoin, for us, it’s really that a token is the most safe and transparent way to hold an asset.
“It’s much more liquid, smart contracts regulate the trust issue and the contract, so that is a key focus for us.”
Mr Van den Bergh said it was still early days for the applications of blockchain in financial services, but he expected rapid growth in the sector.
“The World Economic Forum predicted that by 2027 about 10 per cent of world GDP will be in digital assets, that’s about $US10 trillion,” he said.
“We are really seeing a paradigm shift – if the internet was a way to spread data in an unsecure way, then blockchain is a way to spread data in a secure way.
“The internet really did not change the financial industry, the only thing that changed was the sales process.
“Rather than going to a mutual fund in person, now I go on my phone, but the entire value chain from asset origination, depreciation of the asset, the brokering, all the different middlemen, they are all there.
“There is still a trusted intermediary that arranges the whole process – it wasn’t disrupted by the internet.
“Blockchain definitely will disrupt and make it very decentralised, so we will see a paradigm shift in the next few years going forward.”