Crypto Powered Neobank for Businesses with Ryan Bozarth from Dakota

[00:00:00] Ryan Bozarth: So with the traditional banks to neobanks, you saw an improvement on the UX, on things like customer service, but there's still the rely on the underlying bank, which is oftentimes a regional bank. So the core issue still remains. The bank still decides the access, the services, and oftentimes these more traditional neobanks act as a customer acquisition tool for the underlying bank.

[00:00:20] Ryan Bozarth: In a traditional fintech or neobank model, you're going to have your assets that are going to reside on the bank's balance sheet, whereas in the crypto powered neobank, you're leveraging the blockchain. So the assets are on this underlying ledger that is transparent, it's verifiable, and you have a ability to retain ownership depending on the model of the underlying crypto bank.

[00:00:41] Umar: Welcome to The Accountant Quits podcast, where we help accounting and finance professionals learn how to manage a business using crypto. 

[00:00:49] Umar: Today's topic is on on chain banking for businesses. If you're operating a business internationally and sending payments across borders, it's not always a walk in the park.

[00:01:01] Umar: With traditional banks, it takes days to move your money. They offer little to no yield and worst of all, they can freeze your account without warning. Also you no longer control your assets once they're deposited. They become liabilities on the bank's balance sheet, and if things go wrong, your best hope is a bailout.

[00:01:22] Umar: We are currently ushering in a new era of banking, one powered by stable coins, and one company building on this vision is Dakota, A crypto powered new bank designed for global businesses with Dakota. Your deposits are fully backed by US treasuries. You can send money globally with no transaction fees and earn yield on your assets through U.S. Treasuries and DeFi products, all within a single platform. 

[00:01:49] Umar: And today I have the pleasure to be speaking with Ryan Ryan Bozarth, the Co-Founder and CEO of Dakota. Ryan's resume reads like a highlight reel of success. He was the previous CEO of Coinbase Custody and has led product and design teams at Anchorage, Airbnb, and Square.

[00:02:07] Umar: If you're a fan of the smooth, user friendly experience of neobanks like Mercury, Brex, Wise, or Revolut, then you're gonna love Dakota. Think of all of that, but with the speed of crypto, where international wires don't take days, but minutes. 

[00:02:24] Umar: Lastly, if you're new to this channel, I'd really appreciate your support to help us grow by liking this video and subscribing to our channel.

[00:02:31] Umar: Now, enjoy my conversation with Ryan.

[00:02:33] Ryan Bozarth: It's great to be here. Thank you for having me.

[00:02:36] Umar: I want to start our conversation with the talk of the town for the past week, which is Stripe's acquisition of Bridge. So Stripe acquired Bridge for a reported $1 billion, which is Stripe's largest acquisition to date and the largest acquisition in the crypto industry as a whole. So for the listeners what is Bridge?

[00:02:56] Umar: So it's a platform that enables businesses to accept cross border payments using stable coins. Now Stripe, they previously supported Bitcoin payments, but they discontinued the service, I believe in 2018 due to Bitcoin's volatility. And now after six years, Stripe has re-entered the crypto market earlier this year by allowing businesses to accept USDC payments.

[00:03:19] Umar: So it's clear from this acquisition that Stripe intends to expand its payment options beyond USDC by connecting to perhaps stable coins across different chains through bridges. Of course, this is a bullish deal for crypto as a whole. And I'd like to start this conversation by having your thoughts on Stripe's $1 billion bet on Bridge.

[00:03:41] Umar: Is it worth it?

[00:03:43] Ryan Bozarth: I think it is. I think it's largely a strategic move. So I think it was reported that Bridge is processing billions annually, and they have an incredibly strong team that Sean and Zach put together. They also have a series of key regulatory licenses. So as we know, they are an MSB, they hold MTLs. And they have an established bank partnership network. So I think a lot of people have focused with this acquisition on whether it's the kind of revenue or the team size, but I think it's like the bigger picture that really matters here. So Stripe, for example, does hundreds of billions in payments globally, and this acquisition lets them do a couple of things.

[00:04:18] Ryan Bozarth: First is really puts them in the forefront of a new technology with crypto and the adoption of stable coins. Much like the example of Facebook and Instagram, and then also has the real potential, not only to expand their own offering, but also lower their own operating costs when you think about how much money they're moving cross border as well.

[00:04:34] Ryan Bozarth: And so for those two reasons, I think it was an incredibly smart and strategic move

[00:04:38] Umar: You mentioned MSB and MTL. I'm guessing MTL means Money Transmission License. And what would MSB mean?

[00:04:47] Ryan Bozarth: Money Service Business. So that's the regulatory, in the U. S. you would hold, to move funds regulated by FinCEN and MTLs are a state by state license.

[00:04:55] Umar: Okay! Probably now this acquisition can open the gate for other FinTechs to follow suit. Are you expecting to see more of these similar merger and acquisition deals happening in the near future, maybe? 

[00:05:11] Ryan Bozarth: I think it does set a pretty great precedent. think it's unlikely to do anything like open floodgates across crypto in general. I think it's more bespoke or kind of specific to a certain area. So, for example, going back to this acquisition. I think the strategic importance is really what kind of brought in the large number at the end of the day. The reduction, things like operating costs make this deal rather the unique. And so I think there are some crypto companies that match this profile and therefore it could lead into, a new wave or a precedent for further acquisitions in the future. But I think we'll see this kind of set to like a particular vertical. In particular, comes to mind is like FinTech, where you see a very clear strategic and financial impact for folks that are already offering financial services and the adoption of crypto. 

[00:05:52] Ryan Bozarth: Larger FinTechs, for example, can acquire infrastructure products to help accelerate their own growth both financially, new product offerings, but also as a cost reduction on things like global payments. I think outside of FinTech, it's less likely to be a strong indicator of deciding a broad adoption of crypto acquisitions.

[00:06:09] Umar: Now, I was recently reading the state of crypto report published by a16z and in their words in this report, one of the key takeaways are that stable coins are have found product market fit. According to the report, it costs an average $44 to send an international wire transfer as compared to a dollar in fees on Ethereum as of September 24, and a few cents on L2s as we already know. So in Q2 of 24 alone, there were 8.5 trillion transactions in volume for stable coins, which represents more than the double of visa's, 3.9 trillion transactions over the same period. We'll be discussing Dakota in more detail later. But I want to ask you how do you see stable coins transforming cross border payments for businesses?

[00:06:58] Ryan Bozarth: Yeah, I think as we know, cross border payments are still incredibly difficult in the traditional system, so they're costly, they go through multiple intermediaries, which takes lots of time and with the adoption of stablecoins, you see a world in where you have near instant transfers, like you mentioned, they can be for pennies or on our path to what looks to be sub penny in the near future.

[00:07:17] Ryan Bozarth: And so whether your regions that are limited banking options or you're just looking for faster payments globally as we become a kind of more global business. These are incredibly appealing rails for really any company to adopt. So I see the becoming the standard for cross border transactions in particular. I think within certain geographies you might see a lot more competition, but going across multiple countries and intermediaries, it's just a clear winner. And you see this ability for businesses that can now hold stable coins as part of their operating dollars and even their treasury. And be able to oftentimes transact both with their customers as well as their own entities globally. So going from the US to Europe, for example. In a near instant free platform.

[00:07:57] Ryan Bozarth: And there's a lot of value in there. And so I think particularly for businesses, you start to see more of a network effect as more people come on, because they'll realize that their customers, their vendors now use the blockchain as their own near instant free global network. so I think that will be a large driver and use as we think about cross border payments going forward. 

[00:08:17] Umar: And have you seen the adoption of more, let's say, web2 businesses using stable coins? 

[00:08:24] Ryan Bozarth: We see a couple of use cases for web2 businesses. One is the network effect that we mentioned where if they have primary customers or even with their own kind of first party, their own entities globally particularly for areas like web2 and like FinTech, for example, where they are familiar with the payment space, they know the pros and the cons and they're able to onboard multiple entities to the blockchain, whether using a product like Dakota or something else. 

[00:08:48] Ryan Bozarth: They then see the value of saying I can manage my treasury. Especially for these folks that are moving money globally on behalf of their customers across the geos incredibly quickly. So I think that's one area we see a lot of early adoption. think we'll see others as well. I think the other side of this will be that we see startups now starting to look at the options they have with stable coins and also use those as early adopters as well.

[00:09:09] Ryan Bozarth: And I expect that to move up market as adoption grows. 

[00:09:13] Umar: Yeah, next I want to go through Neobanks and the rise of Neobanks in the past years. So I believe listeners will be familiar that Neobanks exist solely online. They have no physical branches and they've quite disrupted the business landscape And companies like Wise, Mercury, Brex, Ramp, Revolut, N26, some of the few recognizable names.

[00:09:35] Umar: So neobanks, they don't label themselves as banks, at least most of them, but rather as banking platforms. And so they partner with traditional banks and use their banking license. Again, before going through the value proposition of Dakota, how do you explain the value of a crypto powered neobank to someone who's unfamiliar with stable coins? 

[00:09:55] Ryan Bozarth: Yeah, so I think you start like you did with the kind of adoption or shift in neobanks. It really is just a paradigm shift or growth in a new technology. So with the traditional banks to neobanks, you saw an improvement on the UX on things like customer service, but there's still the reliant on the underlying bank, which is oftentimes a regional bank. So the core issues still remain. The bank still decides the access, the services, and oftentimes these more traditional neobanks act as a customer acquisition tool for the underlying bank. Now, the difference once you enter with crypto powered neobanks is that now you get to offer more direct control over the assets because you're relying on the blockchain. Things are now transparent, they're verifiable and oftentimes they're gonna be backed by US treasuries as opposed to be assets that are sitting on a bank's balance sheet, which is just in principle a safer asset to hold and a better counterparty to have. Lastly, you have the ability for these institutions to move money around the world much faster.

[00:10:49] Ryan Bozarth: As you're mentioning, the ability to have these assets on chain provide a lot of opportunities for global payments. And then the last thing I'll mention is that the crypto powered neobanks that we see here, have the opportunity to partner with multiple banks. Whereas the traditional neobank model is really about a one to one relationship. They oftentimes will have one bank that's holding the assets on their balance sheet. 

[00:11:11] Ryan Bozarth: And Crypto because they're only using them to facilitate transfers, last mile of a transaction, they can have multiple parties, which allow them to serve a larger kind of client base on day one. So by that fact, they become a global offering on day one, as opposed to one that needs to start with one country or geography. unlock additional ones at a time. 

[00:11:30] Umar: So to summarize for the listeners the main takeaway is that with a crypto powered Neobank, the assets of the customers would therefore be on the blockchain as opposed to in the liabilities of the bank's balance sheet. Is that correct? 

[00:11:48] Ryan Bozarth: That's right. In a traditional Fintech or neobank model you're going to have your assets that are going to reside on the bank's balance sheet. Whereas in the crypto powered Neobank, you're leveraging the blockchain. So the assets are on this underlying ledger that is transparent, it's verifiable and you have a ability to retain ownership, depending on the model of the underlying crypto bank.

[00:12:09] Umar: Very interesting. Are there Neobanks right now, other than Dakota, you guys are very new. So all these traditional players I mentioned, like the Brex, the Mercury, the Wise, are any of these banks in your knowledge allowing users to send payments via stable coins?

[00:12:29] Ryan Bozarth: Couple of you mentioned, I don't know any of them that are offering this service. There are a few folks, particularly outside of the US that are offering some ability to accept or send stable coins. Oftentimes what it looks like is that there's going to be a crypto address that is an Omnibus account that sits alongside your traditional bank account, but there's not often a kind of interaction between the two. Okay. So it's ability of essentially adding a crypto wallet in many ways to the offering without any kind of functionality or logic to move the funds, interact with your additional account. 

[00:13:03] Umar: So we're seeing like the emergence of new kinds of Neobanks. What will be the role of stable coins for these next generation of Neobanks? 

[00:13:14] Ryan Bozarth: I think these stable coins will really just be the infrastructure that people will start to build new FinTechs neobanks on top of. And it will serve as the underlying platform for a lot of this next wave of businesses. I still think that there is a lot of work to do here. And so we still have work around, for example, orchestration whether that's stable to stable orchestration or stable to fiat.

[00:13:37] Ryan Bozarth: This can still be a challenge depending on the pair and the use case. But I think we'll see, for example, issuance start to play a key role. So Dakota has its own stable coin on the platform that is native to the platform. I think we'll see the adoption of this as a method as well, that people will have an on asset platform that allows them to offer a relatively unique business model as a way of offering access to us treasuries. 

[00:14:01] Ryan Bozarth: And then I think on additional, we'll see the importance of rural assets as part of that. So broader than just stable coins, we'll see these on chain assets start to take more of a role as we look forward into more offerings emerging that are relevant to individuals and businesses, everything's from stocks coming online to traditional US treasuries, corporate bonds, money market funds you name it.

[00:14:22] 

[00:14:22] Umar: My next question is inspired by one of the recent articles published by Zach Fowler, who's been writing quite a bit around stable coins lately, and this article is titled, Why Are There So Many Stable Coins? For new entrants in the space, how should they go about to choose, like, which stable coin am I gonna use?

[00:14:41] Umar: Should they use USDC, USDT, DAI? And there are so many other stable coins right now on the market. Yeah, do you have some thoughts there? 

[00:14:49] Ryan Bozarth: Yeah, I think it depends on how they're going to use the stable coin. And so there's kind of two models in my head. There's one that's like, if I want to offer a stable coin, that's going to leave the platform and be relevant to the larger kind of broader crypto ecosystem. There's a couple of dimensions that I'm going to care a lot about. One will just be liquidity. The second will be brand. And then it might also add just like the ability to generate yield as a third. So you see these like waves of stable coins in many ways. So the pioneers, the people who first started out many ways you saw and the growth of the large stable coins, folks like USDC and USDT both have you know incredible liquidity. They have built strong brands in the space but we all know that they historically have not shared a lot of yield with partners or with the end user. And so I think the next wave that we've seen really has been an adoption of, yield generating stable coins or stable coins that does share that yield in the space in the last year and a half or so.

[00:15:40] Ryan Bozarth: And so you have the ability when you're thinking about things that are happening globally to look at those three dimensions and say, which do I really need to care about and index on and use that to inform your general decision. The other approach is going to look a little more like Dakota, where you have an on asset platform where you say, I'm going to be able to work with an issuer or to create something that works for us and our particular use case. Whether that is the reserves or something we have more control over or something else, and then be able to offer, if you are going to have to use their off platform.

[00:16:07] Ryan Bozarth: Be able to swap it into something that they can use, such as USDC, USDT, you name it. I think those are the two models that I see coming most prevalent is the adoption across those three dimensions for something that's going to be used externally or an on asset platform that you'll use for your own unique use case.

[00:16:22] Ryan Bozarth: With the ability, if you are going to send it off to swap it to something that's relevant to the broader crypto ecosystem. 

[00:16:28] Umar: Now, in light of what we've discussed around stable coins, could you share what is Dakota and how are you leveraging stable coins today on the platform?

[00:16:38] Ryan Bozarth: Yep. So our general principle has that, that the traditional banking system has really just failed to keep up with the speed of the internet. Still relies on a lot of outdated technology. We all know that transfers take days. You can't operate on the weekends or outside of business hours. And we've all seen the kind of recent highlights with issues with banks whether it's fraud on the banks, whether it's the loss of customer funds, you name it. One example is ACH was built in 1972 and it really hasn't been modernized since then. And so as we, as a company and as an industry start to become more global these things start to increasingly have more pain and hurt us.

[00:17:14] Ryan Bozarth: And so really Dakota is here to come in. We want to offer a modern business banking platform, but this one is powered by crypto. And so what that means for us is that, you have full ownership over your account. You have more flexible payment methods, so you can make payments in crypto, not in crypto, so you can send in stable coins and as well as send it out. 

[00:17:34] Ryan Bozarth: But of course you can interact and transact in traditional payment rails as well. So everything from ACH to SEPA, Swift and Fedwire here in the US. We support more global operations with this method. And so we can become a global first company and make faster global payments. You also have the ability to generate better yield options and access to rewards.

[00:17:55] Ryan Bozarth: So within the platform, you can lend out your assets. You can earn rewards for holding the Dakota stable coin itself. And that's really where we're at in terms of a business in terms of what we want to offer. These folks is be able to say that there's a global modern solution to a lot of the problems we've historically faced with the traditional finance and its technology.

[00:18:13] Umar: And Dakota would be available to customers from which jurisdictions right now?

[00:18:19] Ryan Bozarth: Yeah, so we offer it globally today. There are a series of areas that we cannot work with. So the top of the list is anyone that is in a OFAC sanctioned country or entity. And there is a number of high risk jurisdictions after that, which we evaluate on a case by case basis. And sometimes we'll require either additional compliance checks on our side or some cases the ability to offer the service.

[00:18:43] Umar: One of Dakota's main value propositions is that every dollar deposited is backed by US treasuries, and that users can now use only one platform to quote from your website: "Earn yield on their assets in ways that match their risk tolerance". And I want to go through what that means. Could you explain some of the different risk adjusted products available and how do they cater to varying levels of risk tolerance basically for the end user?

[00:19:12] Ryan Bozarth: Yeah, of course. So there's a few ways to earn rewards or yield on Dakota today. So one is going to be just by holding the Dakota stable coin, much like the relationship that Coinbase has with USDC on the platform, we can offer rewards for folks that are just going to hold that. So you have a lower risk but also lower reward risk profile for those folks. For folks that are going to lean into risk a little more within the platform, you can lend out stable coins to underlying DeFi protocols like Aave. And so it will be at a supply side of Aave. This all happens within the Dakota UI, but you will effectively be sending your assets to their smart contract. In which case you're now lending your assets. And so you're taking on higher risk, but the reward is often higher. Really varies on the rate.

[00:19:55] Ryan Bozarth: I think right now it's around 6 or 7%. And it's also the ability to stake Ethereum within the platform as well. And so this is often described as the kind of risk free rate within crypto. And then soon we'll be offering as the ability to have more on chain assets, including your treasury and kind of a broader options in terms of how you want to earn that yield, those rewards and more advanced treasury management tools to help you allocate and manage the allocation of your portfolio. 

[00:20:21] 

[00:20:21] Umar: Wow. Very interesting. I really think you're the pioneer in this space. I've not seen any other companies doing this so far. So I've mentioned that neobanks before they usually partner with other banks and they would use their banking license. And in the case of Dakota, so you don't refer yourself as a bank, but rather as a banking platform. What kind of license would Dakota have and yeah, are you partnering up with traditional banks and using their banking license?

[00:20:51] Umar: How does it work under the hood?

[00:20:52] Ryan Bozarth: Yep, that's 100 percent right. So we are a banking platform. We have a series of downstream vendors. Oftentimes these are registered and licensed and they support our payments on exchange activities and really help us to build a more global payment and asset management product. You can think of these folks as being really a mix of some are banking as a service platforms.

[00:21:12] Ryan Bozarth: Others are EMIs or electronic money institutions. We work with banks or charter banks directly as well. And these all come together to be able to say that we have the appropriate licenses and regulation given the jurisdiction that we're operating in. 

[00:21:25] Ryan Bozarth: Within Dakota itself, we have three entities. We have a US based entity. We have one that's based out of Europe that is a registered VASP, and we also have one in the BVIs. and so together with our own entities, along with these downstream partners, we're able to build a really global and holistic platform that allows us to offer these services to a growing number of companies and individuals.

[00:21:46] Umar: Okay, and for people listening who would like to try it out, open an account with Dakota, what's like the process. And also maybe you could share how like pricing works, because I understood from the website, you're saying you can send USD globally with no transaction fees. What does that mean? 

[00:22:04] Ryan Bozarth: Yep. So maybe quickly to get started and I'll walk into the pricing. You can visit the website. We're at Dakota.xyz you can request access generally within 24 hours, someone will get back to you with the sign up link. That'll kick off your KYB process. We manage KYB generally within two or three days after which if you're approved, you'll be able to log into the product and make deposits and start using their account that same day. As for fees we charge a flat outgoing transfer fee of 10 basis points. If you're not going to keep assets on the platform, nothing for incoming. But for folks that use Dakota, most of our customers enjoy free transfers by keeping assets on the platform and going back to the kind of Dakota's issued stable coin, we can then use that to effectively sponsor or make those transfers free based on what we're earning from those assets. And when it comes to making stable coins in or out, that is completely free, we take care of the network fee as you had mentioned earlier - L1s and L2s are making this increasingly more efficient and effective. And so we rely on things like account abstraction to be able to offer crypto deposit withdrawals with no network fees or fees from Dakota.

[00:23:11] Umar: Okay, just for me to understand. So Dakota's business model is also based on earning income on the treasury management of the customer? 

[00:23:21] Ryan Bozarth: That's correct. So our primary source of income is interest income from the US treasuries. As a secondary we charge for those outgoing fiat payments, if you're not going to hold assets on the platform.

[00:23:32] Umar: Okay, I want to go through the topic of compliance as well, how you guys balance compliance. So there's a lot of players in the crypto space: big Funds, VCs, Tier1 exchanges. They seem to navigate fiat banking with relative ease as compared to the smaller crypto projects who are a lot of times struggling to maintain access to their banks for their on and off ramps.

[00:23:53] Umar: I heard feedback from people, for example, that their neobank was shut down after they made the transfer from the crypto exchange. I cannot mention both of them because I'm actually a customer of both. So, I want to ask you as a neobank, what challenges do you face when onboarding businesses in the crypto space for your compliance needs?

[00:24:12] Ryan Bozarth: Yeah, I think when it comes to compliance, it really depends on finding the right partners. And these are generally institutions that are going to evaluate a business on a case by case basis as opposed to more of a kind of blanket policy that they can apply to entire segment and industry. We spent a lot of time working to establish a network of bank partners that do just that. That offers us the ability to have that one to many relationship we mentioned earlier.

[00:24:36] Ryan Bozarth: And also provides us redundancy as well. And so I think this is the same for folks that are in a similar position as Dakota is. And a lot of the work that goes into some of the things you might not see in the product UX and UI, but it's incredibly important for running a business like this. 

[00:24:49] Ryan Bozarth: When it comes to actually, going through these compliance programs, Dakota as well as our underlying partners has spent a lot of time up front to define these policies, to make sure that they are bank partner ready. And so that way, when it comes to doing things like KYB, we're able to do it as efficient and effectively as possible. And of course, there's a bunch of work that happens under the scene for things like transaction monitoring, both work that we do ourselves as work that rely on these third parties. And so by putting all of this in place, you're able to talk to the underlying institutions or partners that we have in a way that makes them comfortable and most importantly allows them to evaluate these individuals and these businesses, case by case, because you have more data, more information around them, as opposed to a blanket policy. 

[00:25:32] Umar: Yeah, oftentimes these come unannounced for the customer so they suddenly find themselves like they suddenly find their bank accounts being frozen. Based on your experience, what could have compelled a Neobank to close the account of a customer who made a fiat transfer from a tier one exchange?

[00:25:50] Ryan Bozarth: Yeah, so there's probably a few pieces here. One is going to be regulatory scrutiny. I think we all know that banks face oftentimes increased scrutiny for working with crypto companies or crypto transactions.

[00:26:03] Ryan Bozarth: And so there's going to be some folks where they look at that. And they decide that the exposure, the attention is not really worth the cost. I think the second category would fall into things like KYC or AML concerns. Or if it's difficult to verify the origin of the destination of those funds, because they are going to an exchange that can lead them to make that decision. 

[00:26:22] Ryan Bozarth: Third, I'd say is really around more risk management than anything else. So some banks are just going to be inherently more conservative. They're going to take a blanket approach to reduce their risks. And they're going to look at an industry and define it by certain characteristics and decide that it's not worth it for them, regardless of whether that institution on the other side is a tier one exchange or not. In either scenario, it's just gonna be treated the same. 

[00:26:44] Ryan Bozarth: And lastly, I think there's not gonna understand the infrastructure. And a lot of this, it comes down to needing to understand the technology, being able to work with it, being able to some respect, understand the origin, the funds or where they're going. And many times these institutions might not have the in house capability to do just that. And so it's easier for them to fall back on a blanket policy approach, as opposed to something that would evaluate a tier one exchange differently from somebody else.

[00:27:08] Umar: Yeah. Now Ryan, I want to go through how your early experiences at Airbnb, Anchorage... so, for the listeners I mentioned in the intro, you led the product and design teams at Airbnb and Anchorage. Yeah. What key lessons from those roles are guiding your vision for crafting Dakota's user experience?

[00:27:28] Ryan Bozarth: Yeah, I think there's probably a few that come to mind here. I'll start with Airbnb. I think Airbnb was a great experience and really like understanding the customer and the customer journey. There is a pretty well known story about the kind of snow white storyboard that was in the office of Airbnb, where there was a former Disney employee that came in and really created storyboards for the customer journey and each storyboard along the Airbnb process was someone who's going through that journey, whether it was searching for accommodations, whether it was showing up to the home or the house for the first time. 

[00:28:00] Ryan Bozarth: And we would put, things like green, yellow and red indicators to show how well that experience was at that given stage of the company. 

[00:28:08] Ryan Bozarth: And so it really helped us take that lens and look at feel from the customer's eyes of what was happening. At Dakota, we have quite literally done something very similar.

[00:28:16] Ryan Bozarth: So we will have taken this sort of storyboard approach. And a lot of our philosophy as well, suppose the tactics come through something like that, where you have to say, Hey, we have a storyboard go through this customer journey, we can see what's going relatively well, what really needs our attention and focus our time there. 

[00:28:30] Ryan Bozarth: I'll say from Anchorage, for example, I think the biggest takeaway for me was just using, and the importance of like trust and brand. You can imagine Anchorage first getting started out. That trust was key for someone that was working with large institutions for large values of money in the industry that had a lot of concerns around security and compliance regulation, et cetera. And so we took a lot of that and we apply what we learned around brand building and trust and apply that to Dakota as well. Because while we're not ruling with the same exact market segment, there's a lot of work for us to do around education, building confidence in crypto banking and using Dakota as a way to instill that confidence. 

[00:29:10] Ryan Bozarth: The last thing I'll mention is that when it comes to a lot of the work we do in the user experience I think universally, but Airbnb is maybe the best examples we've learned from just doing things that don't scale. And so being able to go in and do the hard thing. Early at Dakota, I personally onboarded the first 150 customers.

[00:29:30] Ryan Bozarth: And so I went back we would go back and use this opportunity to get feedback, to build the relationships, to truly understand like what their use cases were and how they plan to use it. And then we also provide these dedicated support channels that keep those things going forward. So I think those things can oftentimes at the moment feel relatively small.

[00:29:46] Ryan Bozarth: But you do that week over week, month over month. I think it really does compound. 

[00:29:49] 

[00:29:49] Umar: On the storyboard framework of Airbnb, would you have maybe one or two examples that you could share with the listeners how you implemented that at Dakota?

[00:29:59] Ryan Bozarth: Yeah. So one example from Dakota is we are all familiar. If you've set up with an online bank of any kind with the KYB process and the KYB process can be a place that can feel like a bit of a black box, because I'm not sure what's happening, something went in. It can also feel not the most confident if you're doing these things outside of a product interface.

[00:30:18] Ryan Bozarth: So through PDFs or email and things like that. So we really went through our own KYB process. We talked a lot about. What it would take to make that a great experience. And so one kind of frame, for example, is going to be the ability for us to collect the business information. The other might be for the actual KYC of the individuals or the beneficial owners of that business and be able to understand like, how are we doing this?

[00:30:38] Ryan Bozarth: Is it going well? Is that experience what we want it to be? 

[00:30:41] Ryan Bozarth: The other would be like the new user experience. So you're coming into the product for the first time you've been approved. This should be a moment of delight. Like, are we actually living up to that and doing that correctly? And so those are a couple of examples.

[00:30:53] Ryan Bozarth: We go through this customer journey. You got from there to onboarding to take making your first payment whether that's something coming in or something going out, you're doing the same principle and the same philosophy there. 

[00:31:02] Umar: All right. Very interesting. Now the announcement article of Dakota. If I remember correctly, that was in July, 2024. I'm not sure when you actually launched the product. Was that also in July or that was much before? 

[00:31:18] Ryan Bozarth: So we had launched the product in a private beta. We were still in stealth mode, so we didn't talk about it in January of this year, 2024. So we had customers on the platform in production as of January, and we operated with them and effectively co-built the last 15 to 20 percent of the product with those customers in this private beta experience. And then in July is when we came out of stealth or talk about for the first time. And that announcement was really us kind of building up that that wait list that we are currently onboarding today. 

[00:31:45] Umar: Okay, so one of the last questions for this episode I have today is: on the impact as a founder that you want to have. How are you approaching marketing Dakota's platform while keeping the focus on the larger mission of global financial accessibility through stable coins. 

[00:32:03] Ryan Bozarth: So something that's been really important for us from day one has been really emphasizing how the platform like solves real world problems faster, cheaper, cross border payments, you'r better asset security, things along those lines. And so we highlight these benefits throughout our marketing and make sure to emphasize on things like financial inclusion, both in how we price the product, but also build the product as well.

[00:32:25] Ryan Bozarth: And then for us, the messaging always ties back to that mission. So we're going to discuss things like the efficiency of stable coins, that by staying on the kind of crypto network, you can now get, global instant free transfers while also making it available to have access to traditional rails as well.

[00:32:41] Ryan Bozarth: And So folks can really decide how they want to spend time across that kind of spectrum. And so for some of our customers, they will come in and be able to operate solely in things like US dollars or traditional, finance and not really have to spend too much time thinking, thinking about how these things are stored aside from like the value propositions or something like the underlying treasuries.

[00:33:03] Ryan Bozarth: So it's dollars in, its dollars out. 

[00:33:05] Ryan Bozarth: To other folks are gonna come in. And they're gonna say that for some of my operating expenses, I'm gonna spend those through stable coins. I can stay on crypto rails. Well, others will stay in traditional finance or some of those fiat currencies as well. And so by centering this marketing around these kind of tangible benefits that we have, providing people a spectrum of these options, I think we're able to really reiterate and double down on that impact and say, this is what matters. These are the problems we're trying to solve. And that'll always stay at the kind of heart of our growth strategy. 

[00:33:31] Umar: So far, I know it's the very early days of Dakota. Have you been pleasantly surprised by, let's say the profile of some of the customers you've been onboarding? Maybe some of people who are not crypto native, who don't really understand crypto, but what they do understand is that now my payments are way faster, way cheaper.

[00:33:49] Umar: I can get access to these different yield opportunities and I don't have to understand the whole how blockchain works under the hood, basically.

[00:33:58] Ryan Bozarth: 100%. So I think there's a couple of ways that comes in. So one is you'll see a customer that will come in. They might themselves be a little bit more crypto knowledgeable or native. But then they'll have a good experience and they'll bring someone else in that says: Hey, I don't have as much experience with crypto, but I'm able to transact with this other customer vendor, whoever it might be. And I'm just caring about the properties of crypto that I can do it globally, instant and free. Because there is this underlying network that is supporting all this. And so I think that's been really cool piece to see. 

[00:34:27] Ryan Bozarth: The other has been just areas like cross border payments, which I know we mentioned a few times here, but people coming in and being pleasantly surprised at their ability to move the money globally. And so whether that's industries like import export businesses, folks that are operating in different geographies than where their customers are located. But those folks come in, they see those value propositions, the crypto aspect of the business. It's very interesting to them, but it's definitely not at the forefront or what they care about.

[00:34:52] Ryan Bozarth: They're really coming in for global payments, the ability to move money across vendors or customers quickly, retaining ownership in some cases and those really are been very cool to see. 

[00:35:02] Umar: Amazing. Ryan, we are coming close to the end of the podcast. I want to ask you as closing thoughts for the listeners. Has there been anything maybe if we didn't go through earlier that you'd like to share or how would you summarize the key takeaways for the listeners?

[00:35:21] Ryan Bozarth: I think when it comes to neobanking and the kind of crypto powered version that we're seeing come online right now. There's a few key areas that I would just reiterate. One is the ability, when they are structured correctly, to be able to offer you retained ownership over your assets. So I know this is particularly important in these last couple of years when we see some of the issues with the traditional banking system. But the ability for these things to reside on chain. Have those properties of crypto where they're transparent. They're verifiable. you're retaining ownership, I think is an incredibly important, like foundational difference from how this next wave of neobanks will be structured and will be able to offer value to the customers that historically just has not been the case. 

[00:36:03] Ryan Bozarth: Supporting that, you also have the idea that these things are actually not going to be cash that's held at a bank's balance sheet, but by US treasuries. So your counterparty changes dramatically. Your counterparty is now the US government. So, it's backed by the full faith and credit of the US government. And that is also a compelling value proposition for many folks, independently of everything else that we've mentioned. 

[00:36:23] Ryan Bozarth: The next thing I'll mention is that. For folks that are moving money globally I think everyone is familiar with the fact that if you were to send money from the US to Europe or to go across continent, you'll oftentimes go through several intermediaries that each kind of adds one or two days to the transaction. And so those payments could be quite expensive, could take 5 to 7 days to be processed. 

[00:36:42] Ryan Bozarth: And I think people are oftentimes just pleasantly surprised that the fact that, these assets are residing on chain and global to begin with It allows a structure with multiple bank partners where the underlying institution. Someone like Dakota can effectively choose the right initiating bank. And that can oftentimes turn a global payment into an in country transfer in terms of the actual speed of the operation as well. 

[00:37:04] Ryan Bozarth: And lastly, will be treasury and our best interest is rewards and yield. I think we're in an incredibly interesting time for crypto. I think we've seen a lot of progress with real world assets over the last couple of years, the adoption of stable coins in general. And these will just offer more interesting and compelling treasury management solutions at the speed of technology. So the ability to deploy your entire portfolio, balance it in one click, regardless of asset class, I think is going to be a really compelling area coming forward as well. 

[00:37:27] Umar: Perfect. Thanks for summarizing it Ryan. There's a last question, which I like to ask my guests before they leave is do you have a favorite quote, or maybe like a maxim that you live by?

[00:37:38] Ryan Bozarth: This is a good one. I would say quality is not an act, but it's a habit. I think one thing that's really important is that you do things well over a long period of time. I think it's easy to get caught up in the day to day and what I feel like doing today versus yesterday will definitely change. But really matters to be able to say the top thing is the top thing and doing that for a while. And so I think real success is built on that. Those daily interactions, like everything from your health, your family your work all of those compound over time. And so. I try to spend most days with that in mind. 

[00:38:12] Umar: Beautiful! Ryan, thanks a lot for your time today. It was great preparing this episode from me as well to learn a little bit more about, yeah, this new wave of crypto powered neobank. And you guys are the pioneer in this space. If people want to reach out to you, they want to learn more about Dakota where should they go?

[00:38:32] Ryan Bozarth: Yeah. For Dakota you can find us at Dakota.xyz. It's the best place. I'm also personally available on Twitter. It'll be my full name. We can probably add to show notes here. But the handle is just at Ryan Bozarth.

[00:38:44] Umar: Perfect. I'll include all of those in the show notes.

[00:38:49] Ryan Bozarth: Perfect.

[00:38:50] Umar: Thanks a lot, Ryan.

[00:38:51] Ryan Bozarth: Yeah, it was great to be here. Thank you again.