podcast episode 171 transcription

​Al Del Degan Hosts Pam Draper

[00:00:00] Al Del Degan: Hey everybody. Welcome to the show. My special guest today is Pamela Draper. She's the president and CEO of Bitvo Inc., and also a president and CEO of Pateo Payments Inc. Hi Pam. Thanks for joining me today.
[00:00:14] Pam Draper: Morning Al, thanks for having me on.
[00:00:16] Al Del Degan: Now you have a really interesting background in banking and such, and I'd kind of like to go a little bit ahead of that and find out where you grew up in what kind of a child you were, were you always destined to be you know, a consummate professional in banking? Or did you have another path?
[00:00:35] Pam Draper: So I, I grew up in a small town outside of Toronto called Bowmanville. It was pretty small at the time.
But being kind of the end of the line of the suburbs, it's grown quite significantly since I, I lived there. And always enjoyed math. So I guess that probably led to finance, but originally was concentrated on science, math, and science kind of went together and then, to be honest, for reasons, completely unknown to me.
In my last year of high school, I switched out of all science courses and into business. And I applied for the business program at Western at the Richard Ivey School of Business and I was accepted. So I went to, to Western and never looked back from there.
[00:01:13] Al Del Degan: You had sort of headed down the road of being a business person, and that was, that was where you were going.
[00:01:19] Pam Draper: Yeah, absolutely. I joined the business school and then the business school is pretty actively recruited out of to go into either an investment banking or consulting. They kind of push you into one of those two paths. And investment banking seem to resonate more with me at the time. In, in school we did a lot of case studies on transactions that had occurred, and I found those really interesting.
So I was recruited by initially CIBC out of school. And I after I graduated, I took about six weeks off. That was all I got, and that's pretty much all I've taken off since, and then I started with, at CIBC in, in June of 2004.
[00:01:53] Al Del Degan: Where did you go before you started Bitvo? What was sort of the path there?
[00:01:58] Pam Draper: Yeah, so I, I worked at CIBC for six years and then as bankers often do I transitioned to another bank and I started at, at BMO Capital Markets in September of 2010. And when I was working there, I was primarily working with natural resource clients, so oil and gas and mining. And I spent a lot of time in Calgary and Vancouver as a result, even though I was based in Toronto.
And while I. I was spending time in Calgary. The bank said to me, "you know, there's one company out in Calgary that is not oil and gas, so a lot of the bankers don't pay so much attention to it because it's an oil and gas town, but when you're in Calgary, can you talk to them?" And this was a company called Direct Cash Payments.
It was a publicly traded company. It went public during the income trust days. And a they originally worked on bank machines. So they started with a couple of bank machines in Canada and grew to be the largest operator of ATMs globally. And, and that's sort of when I met them, I met them when they were consolidating the global ATM business.
So buying a lot of businesses around the world, Australia, the UK, other businesses in Canada. And I got to be quite close with the management team there. Having worked together on a bunch of different transactions and the management team then at the time being Jack Smith and Susan Anderson and the business gained a lot of success and eventually they decide to sell it to their largest competitor or company card called Cardtronics and that business still exists today.
But when they sold the business, they, they started up a number of new companies serial entrepreneurs that they were. One was a Digital Commerce Bank which is a schedule and licensed Canadian bank. And then we also decided to start Bitvo. And the way that kind of came about is actually an interesting story.
When Jeff, the founding shareholder, started Digital Commerce Bank, a lot of cryptocurrency platforms we're looking for banking in Canada. And the main one of the time was a company called Quadriga. A lot of people are very familiar with Quadriga, but if you're not Google it, or there's actually an interesting Netflix series on it now called "Trust No One". And it became infamous for the founder, Gerald Cotten, disappearing to India and dying in India of Crohn's disease, so the story goes. But when he did so he took with him $250 million of customer crypto assets. The access to those assets died when he did. So it's an interesting story, but the reason it's relevant is they wanted to get banking from Digital Commerce Bank, as I mentioned, but they wouldn't meet with the bank. And the bank said, you know what? I wouldn't bank anyone that wouldn't meet me in person. And they said, you know, transacting in this new asset class should be held to the highest standards of any kind of banking. So if you're holding crypto assets, you should be held to the standard of holding customers' Canadian dollars.
So we set out to build Bitvo to be a more safe, more secure, and easier to use platform than the alternatives out there at the time. And interestingly about a year to the day after we founded Bitvo, Quadrigas as I mentioned, the founder passed away and the company went bankrupt as a result.
So the, the notion that, that Canadians and people around the world needed a better platform in which to transact in this new asset class, was absolutely correct. And we built the Bitvo platform and when we were doing so added a lot of technology to what was currently there. So at the time crypto platforms were.
Very manual. You'd send an e-transfer and a person on the other end would sit there and receive that e-transfer accept it, and then post it to your account. To get verified, you'd send in a selfie of yourself with your photo ID and maybe you'd send them a picture of your passport. None of that meets privacy laws and, and none of it is really safe or, or secure in terms of information, but also access to your funds.
So we build technology to fully automate the signup process, no more sending in of the selfies and to also fully automate the transfer of fiat technology. And when we did that, what we realized was not only did we need this product because we did just build it for our own purposes, but every other crypto platform in Canada, as well as a lot of online gaming platforms and really any website that needs to identify their clients or to accept or remit fiat transfers that aren't on the Visa/ MasterCard rails could also use this technology. So what ended up happening was we formed another company ultimately Bitvo's parent company, which is Pateno payments which is a payment service provider offering that technology to other websites and mobile applications.
So we really created a Bitvo first, and the parent company Pateno came along second, realizing the need for technology in the spaces that we were serving.
[00:06:30] Al Del Degan: As you know, I'm a huge fan of Bitvo, and I'v got all my family and friends using it. And you know what, it really truly is unique in the fact that it's like using your online banking, it's painless and simple.
And you know, I've had a very, very good experience. And you know, this is a sort of like a shameless plug, but it's completely from the heart. I mean, obviously I'm not getting paid by Bitvo to do this podcast, but I think it's something that is really needed and people who have been hesitant to get into cryptocurrency investing, consider that, you know, here's a safe alternative, and you guys are backed by DC bank too right? So it's sort of like a comfortable experience?
[00:07:12] Pam Draper: Well, I wouldn't say backed by the DC bank, so we we're completely separate legal entities and we share common shareholders that's for the relation exists our banking partners our local Alberta based banks, not DC bank is who we use for baking.
[00:07:28] Al Del Degan: Okay. My, my mistake, my apologies. But you do have that support behind you to be considered a safer alternative.
[00:07:36] Pam Draper: Yeah, I think the support in terms of a safe alternative comes from the team that we put in place. The founding shareholders the management team and the board that we've put together. All of our backgrounds are in traditional financial markets or payment processing. We have decades of experience in handling customers' funds, which I think is the important point. A lot of the crypto asset trading platforms when they started, they started more from the tech perspective and the tech is, is definitely important, but there's a whole side of things from a safety and security perspective that comes from being experienced in handling other people's funds and learning the regulations, which at the time when we started, there were no regulations. Now we're actually a heavily regulated business. We're a money service business registered with Fintrack.
And we actually just, in the past month received a status as a restricted dealer with the Canadian Securities Administrators. So while we started and held ourselves to the standard that we do today, we didn't have to, initially we did that because we knew it was the right thing to do, and we knew that regulation would eventually be coming and we built the business to withstand that.
[00:08:38] Al Del Degan: That's really, really cool. Do you have sort of on the, on the horizon, do you have some exciting new ideas or. Things that you can talk about or is it all secret secrets secret?
[00:08:49] Pam Draper: No, no, no. I think so we, we just, we just got through this regulatory hurdle, which is huge for us we're one of the few platforms able to achieve that status.
So we're really proud of that. And now that that's out of the way definitely want to get onto some more exciting things like adding new coins. We're constantly evaluating the market and thinking about new coins to add. So we'd like to do that. As well as adding new features to the platform, we've been really focused on getting that regulatory status and the development required to do so.
But like I said, April 25th, we received it. And now just definitely looking forward to the more fun development work.
[00:09:20] Al Del Degan: And, one of the things that always grabbed me or grabbed my attention about Bitvo was the fact that when you create your account you can put your fiat currency in quite easily. And then once you're in the platform, you could trade till you're blue in the face and it doesn't cost you anything until you pull your money out. It's very reasonable fees compared to a lot of the other platforms where every single trade you make cost you, right?
What was the motivation to do something that, that original?
[00:09:47] Pam Draper: Yeah, when we looked across the space again, we found it we're worried about safety and security, but we also found it kind of confusing and cryptocurrencies can be something that if you haven't traded in them before are just kind of a confusing concept.
So we really wanted to make everything quite simple. At the time, there is many different fee models, deposit fees, trade fees, withdrawal fees, different withdrawal views by the different options of withdrawal. We thought, you know what? This is already the new product. If it's new to most people who are coming onto the platform to the extent possible, let's make it as simple as possible.
[00:10:19] Al Del Degan: That's genius. I love that. Now switching a little bit over to the Pateno payments, so this revolves mainly around what we call KYC or know your customer as well as AML, anti money laundering. Right? So that's, that's some of the technologies that you were referring to were, are kind of based around that, right?
[00:10:38] Pam Draper: We're a payment service provider. So the core products are really facilitating the transfer of money. Our most popular products are e-transfers for example, or EFT but then we do also offer ancillary services around the payment side like identity solutions. So if you have a website or a mobile application and your money services business, and you want to accept funds from your customers via e-transfer and you want to automate that process, we can help you with all of that.
But then you, if you are a money services, you're also required to identify your clients in accordance with Fintrack. So we offer the payment solutions, but we also offer the ancillary solutions of helping you meet your regulatory compliance obligations with that our identity solutions product.
[00:11:22] Al Del Degan: When you talk about the payment solutions, are you referring to things like a company has the ability to accept credit card payments on their website and that sort of thing.
[00:11:31] Pam Draper: Ya, we don't do credit card. So it's all direct to bank transfers. So integrations into the Canadian banking system for things like interact e-transfer.
Visa, MasterCard that's a well-trodden path and there are many solutions out there for that. Ours are sort of more bespoke solutions that either work in industries where Visa and MasterCard are either quite expensive or they're not comfortable in those industries, cryptocurrency and online gaming would be two such industries.
So if you're going on to an online gaming site or a sports betting site, often the funding methods are Interac e-transfer or EFT, which is a direct bank integration. Those are the technologies we provide.
[00:12:08] Al Del Degan: I see. I see. Okay. So that really sets you apart from a lot of the other companies that provide those services, throughout the world, really.
[00:12:17] Pam Draper: Yeah. And it's a good addition to a website in addition to Visa and MasterCard. So if you're already offer Visa and MasterCard, you could potentially expand your market by allowing customers to also pay with Interac e-transfer or EFT. I don't necessarily think about it because I think most of us have a Visa or MasterCard in our, our wallet, but some people don't, some people don't have that access to credit and a direct to bank integration could potentially expand your customer base into that market or help you expand into a market like cryptocurrency or online gaming, where Visa and MasterCard aren't yet comfortable.
[00:12:49] Al Del Degan: That's fascinating. Do you have any advice for businesses that are getting into financial tech kind of industry like I suspect it would be mostly Canadian-based because you have all your experience really Canadian-based but what sort of, like, you've been able to navigate all that crazy regulation and stuff. Do you have any advice for like a new FinTech company starting up?
[00:13:14] Pam Draper: Oh man. So many, so this is my first, so I I learned a lot throughout the, the process for sure. I think that it all starts with an idea. So and when you're looking at the market and you're saying, oh, I wish they did this differently.
Or I wish I had this. I wish I had access to that. That probably means a lot of people have that same idea. So, so start with that. And then just be really ready for the magnitude of the ups and downs. I remember going to a talk to here in Calgary it was in the tech space and it was from a prior successful founder.
One of the Benevity team members and Benevity has obviously been very successful and, and he stood up and gave a speech and it was on a particular day that I was debating going to the event because it had been a really tough day as you have in the startup world. And I really just didn't know if I had the energy or the attitude to go.
And do that, but I went anyway and his speech was so what I needed to hear. So if anyone else needs to hear that, there going to be crazy highs and crazy lows? And the crazy highs can follow the crazy lows by milliseconds a day or a year. And he actually showed a graph and that showed, you know, I'm on top of the world, everything's going to work out, everything's going to be great. And then like the very next day, you're like, ah, we're going bankrupt. We're never going to get a customer. This is terrifying. And just be prepared for that. And I was like, you know, what, if, if he thought that an experienced and I'm thinking that and experiencing that at the very least we're not alone.
And that was really helpful to me and it'll happen in, in various different ways for everyone throughout their, their startup journey. But it absolutely happens consistently. And to this day, to me, absolutely all the time. And I remember that.
[00:14:49] Al Del Degan: With regards to cryptocurrencies directly, what are your thoughts on now that you've established the business and you've got a pile of customers and people are trading and everything in the crypto market continues to go up and down like a yo-yo.
Do you have any thoughts or advice to, say, consumers who want to join Bitvo and get started? Do you have any thoughts on that?
[00:15:10] Pam Draper: Yeah. I mean, if you're curious, I think one of the best ways is to jump in and learn. So log on to onto the platform. Our platform, I think is kind of unique in that we have an education section.
So if you are looking to learn, we provide a lot of material there from a trusted source. When you're Googling online, whether it's cryptocurrency or anything, you're not really quite sure what sources you can trust or not. So at least, you know, when you're, when you're looking at a registered regulated Canadian platform with banking and finance professionals managing it.
You can read that and know that they have the experience to probably be writing that. So start poking around, start learning, see what peaks your interest. Open up an account, fiddle about, see how it works. Put some money in if, if you want to have some skin in the game. Cause often that helps with the learning experience too, and it doesn't have to be a lot.
It could be. It could be $20. It could be a hundred dollars. It could be a thousand dollars and you don't have to buy a whole Bitcoin. The cost of Bitcoin today is a lot cheaper than it was a week ago, but it's still 31, 32,000 us dollars. You don't need to spend that much. You could buy $20 worth of Bitcoin on the platform you could send in an e-transfer for $20, and in 10 minutes, be owning your first, very small fraction of a Bitcoin. And maybe that helps you learn, or maybe it's not Bitcoin. We offer 11 different cryptocurrencies. Like I said, there's lots of reading material there, there's information on each of the different cryptocurrencies we offer. So poke around, read up, do your reading. And then if you're feeling it, jump in with a small amount, whatever you're comfortable with.
[00:16:39] Al Del Degan: The overall advice in cryptocurrencies is don't play with money you can't afford to lose. I guess that's sort of the standard.
[00:16:46] Pam Draper: Cryptocurrencies, or any risky asset, right? Like cryptocurrencies get kind of a bad rap, but I think of you could sign up for BMO Investor Line Platform or Quest Trade, et cetera. And by a junior mining or a junior oil and gas stock, or some other emerging technology, and be just as at risk as if you're buying any of the cryptocurrencies we offer. So I would say for cryptocurrencies or anything you're beholding to do your own research and figure out what works for you and figure out what you're comfortable losing. And, and to your point, if you're not comfortable losing anything, then think about that too.
[00:17:16] Al Del Degan: That makes a lot of sense. And one of the things that that I found really useful on your platform is that you have professional experienced traders as well, that talk about the risks for each of the different coins at different sort of short-term long-term risks for each of the coins based on are kind of like regularly updated statistics and stuff.
That's, that's really, really valuable. So could you talk a little bit. How that all works?
[00:17:43] Pam Draper: Yeah. When we built the platform we tried to really differentiate ourselves by adding a lot of features to it. So we, we try to be the most feature rich platform in the Canadian landscape. Some of those features are the Bitvo Same Day Guarantee, the Bitvo Cash Card the education section that I talked about, and then what you're talking about, the proprietary technical analysis.
So when you're, when you're analyzing a company, you can do two types of analysis. You can do fundamental analysis and technical analysis. Fundamental analysis is analysis on the company, specifically its revenue, streams management team who its customer base is what geographies and jurisdictions, it services.
You can do all that kind of analysis in a company. You can't do that on cryptocurrencies. So they're the one analysis because they're not companies, they don't have revenue and they don't have a management team, et cetera. So the one type of analysis you can do is, is technical analysis. And if you're a time trader you're familiar with all kinds of technical analysis indicators, that the first time cryptocurrency trader probably isn't. So what we built into our platform, when you're logged in, is there are technical analysis tools and scores.
So we have, if you are that technical trader, you can do a deep dive and pull up 20 different. Technical analysis indicators and analyze those that's something you can do. But if you're not that technically inclined, we have that quick view technical analysis indicators, which tells you how the, each of the coins that we offer is screening on a longterm, medium term, and short-term basis.
Absolutely. On their own. And then also relatively versus the other coins that we offer. And that's powered by an artificial intelligence algorithm that feeds into all of those different technical indicators that I talked about. You don't actually have to go in and analyze them. Yeah. You can see how they're screening based on the summary that the tool provides.
[00:19:28] Al Del Degan: Yeah. That's really, really fascinating. I think that you've cleared up a whole bunch of questions that I had. Is there anything else that you'd like to address before we call er a show?
[00:19:39] Pam Draper: No, I think you've covered a lot of ground there, Al, and I enjoyed working with you when you worked with the Bitvo team. And it's great to reconnect here as well as that some of the conferences we've been. I think that's what we're really excited about now is getting out and kind of seeing everyone in person again, after a long couple years.
[00:19:54] Al Del Degan: Absolutely the industry is, is so fascinating and so new and so, you know, bleeding edge and there's so many things going on and it, and it's really, it really comes down to that. That need to do a little bit of educating yourself. You know, if you, if you don't have sort of a trusted family member or a close friend that really knows what they're talking about you really need to do your own research because, like you said, on the internet, there's a whole bunch of BS, right?
And if somebody has a certain coin that they wanna sell at a higher price, they're going to talk so highly about that coin and how it's going to go to the moon and everything. And then really all their doing is waiting for a bunch of dummies to go there and buy the coin so that it goes up really high, then they sell it and make their money.
[00:20:37] Pam Draper: Yeah. I mean, who knows, right? We don't give trading advice on our platform and I don't certainly personally, but I think even the most experienced traders find it really hard to perfectly time the market.
[00:20:48] Al Del Degan: Yes. Yeah. Real, real fast moving. Well, Pam so great to talk to you, thank you so much for being my guest on the show. I really appreciate it.
[00:20:57] Pam Draper: No, no problem at all Al, thanks again for having me. I appreciate that.
[00:21:00] Al Del Degan: Tune in next week. Same time, same channel. We'd love to hear your thoughts and have you subscribe to the show and continue to listen.
Thanks very much for listening everyone. Cheers!