by Sandra Wilmeroth
Moneycab.com: Mr. Imbach, Sygnum Bank is the first Swiss bank featured in Metaverse Decentraland from December 2022. What are your hopes?
Matthias Imbach: On the one hand, for us it is a learning process that we try out and analyze. To know what it means to be represented in the Metaverse and how to go from the idea to the concept and the project to a live presence there. With this experience, we can now help other regulated institutes, from which we have already received many inquiries in this direction. Second, it is in our mind and spirit to be present in a digital world, and we also hope that we will be able to build a strong community on Metaverse in the medium to long term.
Why is this important to you?
As a bank with a focus on digital assets, we believe in Web 3.0, and I hope that decentralized metauniverses will prevail, not centralized ones, like Facebook founder Zuckerberg’s meta. Because only a decentralized architecture means that those who are responsible for the positive network effects – the users – also benefit from them.
Sygnum’s presence is in Times Square, or rather its digital image. How much is that plot of land worth to you in Decentraland now that prices have gone up?
The country was the smallest item because many of us, myself included, have been active in the crypto sector for a very long time and so luckily the plot in Decentraland was bought quite early and therefore still quite cheap.
“The topic of ‘mixed reality’ with a business model at the border between the real physical and digital world will become significantly more relevant in the next five to ten years.”
Matthias Imbach, CEO of Signum Bank
How much is your piece of land worth in the Metaverse today?
I can’t say for sure, but for the top it must have cost a seven figure dollar amount because it really is a big piece in a prime location.
Will or should every bank have a branch in the metaverse in the future?
There will come a time when it will be normal for banks to have a Metaverse presence as well. Because the topic of mixed reality, with a business model at the border between the real physical and digital world, will become significantly more relevant in the next five to ten years. If only because it can be monetized well and new markets can be opened with it. But first the technology has to get better, first of all it has to become more scalable. We also noticed this at our launch event, where there was a lot of traffic, with the platform sometimes no longer taking visitors to the third floor of our building because it was overloaded.
Sygnum Bank released new indices for the crypto market in December, what are your hopes for this?
More and more investors believe in megatrend crypto, or DLT, and they may have analysis here and there which sub-fields, be it gaming or DeFi, are performing how, but they have no comparison to other sub-sectors. We now map the most important subsectors in the indices and present their development in an intuitive, easily investable and transparently comparable way.
Expansion into Luxembourg was planned last year, from where the first B2B client in Portugal was acquired. Where is international travel going now?
The base is always the hub in Switzerland and Singapore and we are also regulated in both locations. In the past year, we have received additional licenses in Abu Dhabi and Luxembourg. Luxembourg is strategically interesting for us as a gateway to the European market and because of its reputation, especially in the field of investment funds. In Abu Dhabi we plan to go live in February/March.
Then only America is missing?
America is like that. It’s a big market, but also a very difficult one, as some Swiss banks have learned in the past. Many of the major crypto scandals in recent years have occurred in the US, most recently the collapse of the FTX crypto exchange, and I can imagine that regulators are now under particular pressure and have their backs against the wall. I have to put a bit of a crown on Switzerland here, the terms of the regulatory framework were set early and cleanly; then such stories as with FTX will hopefully never happen here.
Will funding be secured for further expansion?
The company is still controlled by the four founders and management, together we own the majority of the company. Last year we raised another $90 million, but then we also turned down over $50 million, which shows that we have the ability to continue raising funds. We are currently well funded, but it is entirely possible that we could raise a little more money depending on how things develop. However, this is not strictly necessary.
Is an IPO on the long-term roadmap?
This could definitely become relevant at some point, but it’s not like we’re in the immediate planning phase. It’s an option, but it hasn’t been decided yet and it wouldn’t be a good time right now.
“In the last year, everything that has happened in the traditional financial system over a period of 50 to 100 years has happened in the crypto world.”
2022 was a black year for cryptocurrencies and the entire scene, not only because of the FTX crash, but Sygnum Bank was able to take advantage of it.
I don’t want to be seen as a beneficiary of this crisis because I’m not happy when many people lose a lot of money. But a lot has happened in the last year that is ultimately also due to greed and fraud. FTX was a centralized organization that was unregulated and run by people who – as it is now – acted dishonestly and criminally and now the regulators are very active – we also know this from the traditional financial world, where with every crisis and every scandal, they were more and more regulations and governance built up. The only difference is that in the last year, everything that has happened in the traditional financial system over a period of 50 to 100 years has happened in the crypto world.
But what ultimately helped Sygnum Bank as a regulated institution get more customers?
As a result of the scandals, many players realized that trust is also necessary in the crypto sector and that counterparty analysis is an important factor. When FTX went down, clients could no longer withdraw their assets there. This cannot happen at Sygnum as we keep cryptoassets off balance sheet and they are bankruptcy protected. As a result, we had a net new cash inflow of CHF 845 million in the fourth quarter of 2022. This trend will continue in January 2023.
“In the fourth quarter of 2022, we had an inflow of new money of 845 million Swiss francs. This trend will continue in January 2023.”
Can you make any other statements about the performance of the business in 2022?
In general, it was a very difficult and complicated year for us, because almost every day we had to reorient ourselves and analyze what was happening around us. But we were able to increase sales relatively strongly compared to the previous year, and at a time when the absolute majority of crypto players were experiencing significant declines in sales. Additionally, assets under management have increased in a market where prices have corrected by up to 80%.
Is the bank profitable?
In 2021, we were profitable for one quarter, but then launched a ramp-up strategy and raised fresh capital again. Therefore, at the moment we are not working for profit, but we are moving within the framework of what is foreseen in the business plan. Otherwise, we wouldn’t be expanding and making significant technology investments. We believe in the market and currently want to expand and gain relative market share.
When does the business plan anticipate achieving profitability?
If we were to focus on our core business and forgo certain new areas of business, we could continue to run our business profitably today. But we are solidly funded and we actually want to invest even more this year. For 2024, however, the goal should be to reach zero profit. Unless we see the market environment completely change and we get a chance to gain market share again. Then it may be that we double down again. Because if I’ve learned anything on our stage: you can’t put together business plans for five years and then follow through on them tenaciously. We are in a young market that every three months is faced with a new external factor that turns everything upside down. This requires great dexterity.
Where do you find the strength to do this?
I lived in India for many years, managed the family office of Indian industrialist Ratan Tata and invested in technology companies for him. I learned from him that intuition and the trust you have in people are just as important and that nothing works without risks and that you can still achieve a lot with a little in your hands through smart approaches and innovative thinking. In India this is called “Jugaad”.
How do you apply it in business?
I always tell my team three important things: First, this entrepreneurial journey is a constant oscillation between euphoria and fear of failure. Sometimes I get up in the morning and think we’re going to change the world. Then I have a few meetings and by noon I’m like, “It’ll be gone next year.” In the evening, I look at my little daughter and think again: “Everything will be fine”!
What’s the second thing you like to tell your 220 employees over and over again?
Having a long-term strategy and a North Star to guide you is extremely important for the company’s mental health and prospects. So that you do not lose your grip in the boom phases and suddenly get the feeling that you are the best trader and do not panic in crisis years.
“I often say to my team: Don’t be afraid to make mistakes — but don’t tolerate any lapses in integrity or anything to be ashamed of.”
And the third?
This is the sun test, I also learned it from Mr. Tata: It is extremely important in the evening, just for two or three minutes, to ask yourself: “What I decided today, how are the people around me doing, and would I be ashamed of it in front of my family, my closest friends, if I read it as a headline in the Financial Times, the NZZ or Moneycab tomorrow morning?” If you do that, you’re suddenly completely free to make mistakes, too, because then you’re only making mistakes that aren’t you need to be ashamed. And that leaves you free to spur innovation and try new things. That’s why I say: Don’t be afraid to make mistakes — but don’t tolerate any lapses in integrity or anything to be ashamed of.
Mr. Imbach, thank you very much for the interview!