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$50 Billion Market, $60 Million Yearly Contract Revenue: Story of Vault's Leadership Through Eyes of Its Founder, Vladimir Gorbunov

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Thu, 14/03/2024 - 7:30
$50 Billion Market, $60 Million Yearly Contract Revenue: Story of Vault's Leadership Through Eyes of Its Founder, Vladimir Gorbunov
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U.Today: Hello, Vladimir. Could you please tell us about your company, Vault?

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Vladimir Gorbunov: Vault is one of the leading companies in the digital/crypto banking segment worldwide. This is a new direction that is demonstrating phenomenal growth, thanks to demand significantly exceeding supply. Vault's main business task is to provide a ready-made digital/crypto banking infrastructure for third-party partners (clients). And they, based on this infrastructure, build their business. With Vault, any company can launch its own digital/crypto banking business 20 times cheaper and 30 times faster than if it were to use its own development. Vault's product includes all aspects of digital banking: a card program, core banking, SWIFT, SEPA transactions, compliance, a suite of licenses, account top-ups/withdrawals, processing, exchange and purchase of cryptocurrencies. Our clients can get this complete range of turnkey services in a very short time, and for significantly less money than developing it on their own.

U.Today: How did you come up with the idea to create Vault and move into the B2B direction?

Vladimir Gorbunov: We started in 2017 as a B2C business with Crypterium, which later became Choise.com. Historically, when we first entered the crypto market, there was no ready-made crypto-fiat infrastructure, there wasn't even an option to buy Bitcoin with a bank card, and banks refused to cooperate with crypto companies. There were very few services that could be integrated. So, we had to create the infrastructure ourselves. We invested more than $35 million in creating our infrastructure to be able to release our own solutions, and these same solutions would later become the foundation for Vault.

For a long time, we developed in the B2C sector. We were one of the first companies to launch crypto-banking Visa cards and Apple Pay payments. We provided users with a full cycle of depositing, withdrawing and exchanging cryptocurrencies. We implemented many unique features. But our strongest aspect was always the crypto-fiat infrastructure.

At the end of 2022, in the midst of the crypto winter, the demand for retail products significantly decreased, and we began to explore new market needs and opportunities it offers. And we discovered a niche where demand significantly exceeded supply. This led us to sign about 40 contracts worth approximately $18.5 million in contract value in the first year of working in this direction. So, we came to the creation of Vault organically: We built the infrastructure, engaged in B2C, saw great demand, people came to us asking to make the same product for them, they wanted crypto-fiat banking, crypto cards, compliance, a full set of turnkey products. Initially, we even refused, but at the end of 2022, we reconsidered our decision and eventually found ourselves in a niche whose market is projected to hold a potential exceeding $50 billion in the upcoming years.

U.Today: You mentioned that you have already signed more than 40 contracts, which companies are mainly the customers of your white label product?

Vladimir Gorbunov: When we first entered the market, it seemed to us that our services would be primarily needed by crypto companies, because they traditionally experience problems with crypto-fiat solutions, just as we did in the past. But we were genuinely surprised that in practice, crypto companies make up no more than 25% of our customer base.

Over the past five years, there has been a huge leap in demand for the implementation of banking and crypto-banking solutions. Everyone today wants to become a bank or a crypto bank. Previously, banks were something big and complicated, where you needed to obtain licenses, and it was generally unclear why it was needed. Today, however, with the growth of technologies, especially those that Vault makes, when you can launch your own digital/crypto banking practically worldwide in a matter of months, demand for such solutions is growing at an enormous speed, by hundreds of percent a year. We clearly saw this demand for ourselves.

Our portfolio includes crypto companies, companies engaged in affiliate marketing. There are companies that need certain parts of our product: either cards, or banking services, or some groups of products. There are investment funds that want to create products for seamless interaction with their clients. There are MLM companies with hundreds of thousands of agents worldwide, and they need to make payments to cards, they need to be able to quickly send, receive and use money.

Now is the time when the number of neo- and digital/crypto banks will double, or even triple annually, and a huge number of players will enter this market in the future.

U.Today: Which services are you currently seeing the highest demand for among your clients?

Vladimir Gorbunov: Our product is implemented in three main frameworks. Some clients need only apps or just web versions of our product, fully ready — they just want to place their brand in a white label format and this way be able to attract new clients, or give their current base the ability to issue cards, conduct banking operations, buy and exchange cryptocurrencies. In this case, we actually give a fully ready-made turnkey solution in a white label format. The product has an admin panel for flexible configuration, for example, you can set fees, customize the product for your brand.

The second framework is when our partners need an API, they don't need a ready-made solution, they have some existing product, and they want to integrate part of our product. These could be cards or cryptocurrency exchange or banking operations, but through an API.

The third framework suits a group of clients who need everything: both API and a separate standalone solution. We serve all these three groups of clients.

U.Today: Does Vault have any competitors?

Vladimir Gorbunov: We practically have no competitors. It would seem that in such a promising niche there should be a lot of competition, but the fact is that we have competitors only in individual verticals. In crypto cards, in buying and selling cryptocurrencies, in compliance services — there are companies that issue sublicenses, for example. But someone who has combined all this into one digital/crypto banking product today, there practically aren't any. Such companies can be counted on one hand, and there are virtually no serious entities that have invested at least $10 million in creating and developing these products.

If last year we signed 40 contracts, this year our goal is to sign 100 new partners, launch 100 digital/crypto banks. Just three-four months ago, this goal seemed too ambitious and practically unachievable. But 2024 has arrived, and just in February, we signed nine new contracts, and in March, another 12 will be signed. So, we have a chance to even exceed this plan. This accurately reflects the demand for our services, given that the product has a relatively high average check. In fact, we created and led this market, and by the end of the year, we plan to become one of the largest B2B fintech players in the global market.

U.Today: What makes Vault's solution unique?

Vladimir Gorbunov: The uniqueness of Vault consists of three parts.

First: We allow clients to get a fully ready-made solution. This means that the client just needs to integrate our ready-made solution and in the shortest time get their own highest-level digital/crypto banking solution.

Second: We provide a product that will cost the client approximately $60-150K for onboarding and about $10K per month for maintenance, which is many times cheaper than their own development. For this money, the client gets everything: support for licenses, KYC, compliance and all necessary tools. With the client's own development, all this would require the company to invest from several million dollars to several tens of millions of dollars.

Third: Our clients receive a ready-made solution within 10 days. In some cases, the launch process can reach five-six weeks, but this is still significantly faster than their own development, which in such cases can take from one and a half to three years with constant funding for each stage of development.

U.Today: What other factors can you provide in favor of choosing Vault's solution instead of creating your own?

Vladimir Gorbunov: Many companies entering the fintech market want to build their own solution. But it is important to understand that an own solution does not immediately become marketable, it has not been tested and many processes have not been fine-tuned. Many companies facing this are puzzled by the fact that maintaining licenses also costs a lot of money (from 500K euros a year), you also need to constantly deal with anti-fraud mechanisms and need to create and improve processes. Ready platforms, which have been in the market for many years, have already gone through all these processes and have the necessary experience. In my opinion, one of the main arguments in favor of choosing a solution from Vault is that we allow our clients to avoid these mistakes.

U.Today: Can you tell us more about Vault's business model?

Vladimir Gorbunov: Vault's business model is a very profitable business. Currently, we sign contracts worth millions of dollars every month. On average, for the onboarding of each client, we receive on average $80K, plus $8-10K in monthly payments. We are currently signing three-year contracts that bring the business, on average, 350-400K dollars in guaranteed payments alone. But for the end client, this is still tens of times cheaper than their own solution, so our average check grows and will continue to grow. At the initial stage, we offered our services at a cost twice cheaper than the current one. Now the cost is rising, but we do not observe a decrease in demand.

U.Today: Does Vault have any particular goal or mission?

Vladimir Gorbunov: Absolutely, and it is a very global one. Looking at the current speed of cryptocurrency and digital assets adoption, it's clear that this market will only grow in the future. Yet, banks, financial institutions, fintech services and a vast number of other companies lack the expertise to create such solutions. Therefore, Vault takes on a significant role as an enabler, providing ready-to-use solutions that these companies, banks, fintech services, processing companies and others can adapt to their business without needing to develop them independently. Likely, large banks such as Citibank, JPMorgan Chase & Co. are implementing their own solutions, but there are tens of thousands of banks worldwide, tens of thousands of fintech services and an infinite number of companies that would like to integrate such solutions. Our goal is to enable any company in the world to offer digital/crypto banking functionality to its clients, thus ensuring the mass adoption of cryptocurrencies.

U.Today: What about geography? In which countries are your solutions available?

Vladimir Gorbunov: Our product is wonderful in that it allows us to provide solutions to clients regardless of their geographical location. Currently, we have clients in Europe, Africa, Latin America, North America, Asia. We serve almost the entire world. This means tens of millions of users worldwide.

U.Today: Can you tell us about your further plans?

Vladimir Gorbunov: If we talk about our future plans, they are very ambitious. By the end of the year, we plan to triple our revenue compared to what it was in 2023 and reach a figure of $60 million. And another year later, to triple that number again, reaching the mark of $180 million. Considering the current demand and market size, this looks more than objective and achievable. Certainly, we will continue to monitor the market and track the emergence of competitors, which will guide us in adjusting these plans. However, the current situation is such that there is ample space in the market, and our primary task now is to cement our leadership. So much so that asking someone on the street which digital/crypto bank they use, we would hear the name of one of our clients in response.

Besides scaling, we also plan to strengthen our presence in specific regions such as North America, Europe and Asia. Currently, we have a whole network of sales agents around the world, helping us to scale actively and reach out to new companies and markets. A business with good profitability is advantageous for agents, and in turn, they help us scale.

Our further plans include expanding the team, increasing the company's workforce and strengthening the existing infrastructure. But the biggest challenge will be that already today, every fifth of our clients is a bank or a large fintech. This means there is a specific demand for our services from regulated financial institutions, which also opens a new window of opportunities for us.

We will be entering into new strategic partnerships, connecting new card issuing companies, significantly increasing the number of partners providing core banking, and we will be increasing the number of processing partnerships. And, in the future, thanks to such a number and variety of partners within Vault, we plan to become not just a "standard for banks and fintech companies" but a fully-fledged marketplace for ready-made digital/crypto banking services. This way, we can attract not only new customers but also new service providers, acting as a kind of showcase for them.

U.Today: You mentioned the concept of a marketplace, could you please elaborate?

Vladimir Gorbunov: This concept implies that today, each of our clients acts as a sort of showcase. Currently, we have 40 such showcases, and there will be 150-200-1,000. This becomes a very cool tool for distributing various products, thereby making us appealing to a diverse range of potential partner-suppliers. For instance, we are currently in negotiations with several exchanges to add their trading terminals to our offerings, which we could integrate for our clients. Similarly, processing tools, investment instruments, various services, credit and deposit products and much more can be implemented. Thus, through Vault's integration, companies can choose which services they would like to offer their clients. This concept is somewhat similar to the Stripe company model with its ready-made and extremely simplified solutions with broad functionality. We are actively growing in this direction right now.

U.Today: Is Vault essentially a crypto company or a fiat company?

Vladimir Gorbunov: First of all, it seems to me that the line between crypto and fiat companies is beginning to blur. Already today, we see that many banks are adding crypto functionality to their services. For instance, Revolut — it's hard to say definitively whether it is a crypto company or a fiat company; it seems to be something in between.

We primarily consider ourselves a fintech company that deals with financial technologies and combines various tools, including both fiat and crypto solutions. Of course, a major part of our work is focused on fiat tasks because we are constantly integrating with new banks, new processing services, card issuers, engaging in compliance, and doing what traditional fintech B2B companies do. However, all our products, on a global level, are connected with cryptocurrencies, which opens up tremendous opportunities for us to serve clients from a vast number of jurisdictions.

Vault aims to ensure that every bank and each fintech company can receive a set of ready-made solutions for integrating into the crypto market. This, in turn, will make the global market more receptive to crypto technologies, and we are pleased that we are on the path to these solutions.

We are building a very large, rapidly growing and profitable business, whose demand currently exceeds our delivery capabilities. Additionally, Vault is perhaps one of the first companies in the world to operate at such a global level, allowing us to serve clients from 160 countries. And we are grateful for this opportunity provided by the past crypto winter, as it helped us find this niche and establish ourselves firmly within it.

U.Today: From the perspective of service providers, who are Vault's key partners?

Vladimir Gorbunov: Vault's infrastructure is fully built on the foundation of Choise.com's infrastructure. It includes new elements, but the core is taken directly from what was developed for Choise.com. We work with top global companies, most often Tier 1 providers, such as Checkout.com and Worldpay for processing. Regarding exchanges, our partners include KuCoin, Bitfinex, Kraken, OKX and Binance. Custodial solutions are provided by BitGo and Fireblocks. In building our infrastructure, we strive to involve only the best partners with significant experience in the industry and a distinguished reputation.

U.Today: What do Vault's successes mean for Choise.com?

Vladimir Gorbunov: Initially, Vault was just one of the directions of Choise.com's operations. However, today, our main focus is precisely on Vault. Unlike Choise.com, where we provide our services directly to customers, requiring active audience engagement and significant marketing investment, with Vault, when we deliver a turnkey solution to a partner, the responsibility for audience attraction lies with them. This allows us to earn at all stages of operation and to build ambitious revenue plans thanks to the business's high margin. Of course, we do not forget about Choise.com; we have numerous plans for developing the B2C direction, which will be implemented this year. This applies to our CHO token as well, since it is the token of our entire ecosystem. Therefore, we are actively working on the model to ensure that the token also benefits from this shift in focus toward the B2B direction. In the near future, we will be able to share several important updates with our community. We are glad that the crypto summer has begun, moving in step with us, as demand for our products continues to grow, and we will certainly continue initiatives regarding Choise.com and the ecosystem token.

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