ZELF was launched 2 years ago with the goal of becoming “the bank of Gen Z”. While that is still the case, the next step for the “Bank of the Metaverse” is to become a key player in Metaverse banking, offering embedded financial services for gamers in Discord and other social messengers. ZELF began operations in June 2020, and by the end of 2021, it already had one million registered users.
With ZELF users get full control over their money from the messenger of their choice. It works seamlessly in Facebook Messenger, WhatsApp, Discord, Telegram, and other platforms. ZELF is therefore completely app-less while providing an instant virtual card to the customer.
Elliot Goykhman, founder and CEO of ZELF, is a serial entrepreneur, formerly a top manager of the US and European banks, managing 9-figure budgets and thousands of reporting FTEs.
Elliot has agreed to an exclusive interview with Everly where he explains his vision and discusses what makes ZELF so unique among other neobanks.
Zelf was introduced just as a Gen Z banking tool. What’s behind the “Bank of the Metaverse” shift and why did you choose to go this way?
I feel that it is a natural continuation of what we started. We started building a bank for Gen Z or let’s say a bank for younger generations because the age groups are pretty abstract and our cards are used by other age groups as well. Originally we entered the niche of digital banking for teenagers, creating a neobank for children and their parents. Greenlight, Step, GoHenry and Revolut Junior (now Revolut <18), solve the problem of managing kid’s allowance, but from the standpoint of a parent.
But in interviews with our customers we saw that their primary concern was not getting an allowance from their parents and how to spend it wisely, but a more mature ask of how to become a part of the creator economy, how to earn in play-to-earn games and about investing into crypto and NFTs.
While other banks view Gen Z and gamers in general as kids, we see them as the impetus of change both in technology, empathy and level of social responsibility. We hail them as early adopters of cutting-edge technologies and we try to meet their demand to be a part of the web 3 ecosystem and to be able to manage their assets dispersed across multiple games and blockchains under one trusted banking roof. This unified financial experience is a great value proposition and that’s what we’re seeing right now, in terms of the customer response.
With what you mentioned, one would expect that you would be working with crypto as a currency. Why did you decide to stick to regular currencies?
We have purposely chosen the niche of “non-crypto natives”. Crypto natives are a very small percentage of the population and they already invested the time to adjust to cumbersome interfaces and non-transparent fee structures. They know how to top up the wallets, how to send payments, etc.
Conversely, the non-crypto folks have heard of crypto, they have heard of NFTs but every time they’re actually coming up to some website that says “Connect your wallet” they see that huge and steep learning curve and just say: “Oh, screw it. I’ll do it some other time.”
Plus we all live in a real world, where goods are priced in regular fiat currencies and with crypto swinging wildly you cannot expect it to be a reasonable everyday tender in exchanges.
How do you feel about high street banks entering the metaverse?
What has happened so far were mostly marketing stunts by the banks. JPMorgan had a 3D building built in Decentraland with a portrait of Jamie Dimon and some LCD screens that you can look at. At some point of time, there was a tiger roaming around the building and that’s it. That was the way they made the news with “JPMorgan enters the Metaverse.”
Some experts joke that by building branches in the Metaverse bankers reinvented queuing in the virtual worlds. Pretending to be experimenting in the Metaverse, they do not allow their cards to be used via MoonPay, a primary source of top-ups on OpenSea. How Metaverse-friendly is that?
I welcome big banks to really enter the Metaverse because it is better for mass adoption — the more companies join the game, the more native it becomes for the consumers. We are probably two to three years away from seeing big banks doing something halfway serious.
So what exactly is your niche at the moment?
The financial services in the Metaverse and GameFi, in general, are at a nascent state. We are developing several supporting services and we are yet to see which one becomes more dominant. These services are: escrow service for game item trade, buy now pay later within games and payday loans secured with virtual items.
In-game item trade we act similarly to what PayPal has done for eBay, like 20 years ago. We handle the escrow of funds and the money transfer for game items and NFT exchanges. For example:
— Jan wants to sell me a skin in a computer game, but he wants to make sure that I will pay him the amount agreed.
— ZELF holds Elliot’s money in escrow and then informs Jan that it’s safe to send the item to Elliot.
— When the item arrives in Elliot’s Steam account ZELF releases the payment to Jan.
In lending scenarios, such as buy now pay later and payday loans we take a vastly different approach from Klarna, Affirm, Afterpay and the like. Unsecured lending for consumer goods is very risky and BNPL companies’ recent tumbles prove it.
We focus on lending secured with virtual items, such as skins, weapons or characters in games. This not only increases the likelihood of repayment but also limits banking losses in the case of default. In scoring, we take into account customers’ experience in the game to make sure that we don’t provide a loan for an expensive skin or a weapon to a person who is a noob in this game.
As Metaverse evolves I am sure there will be demand for mortgages for virtual real estate.
Do you still consider ZELF to be a neobank or has it now become more of a FinTech? Do you care about the labels?
I think that FinTech and neobank these days are used interchangeably but there are some regulators that actually don’t even like the word neobank, because that implies that you’re a bank. I think of ourselves as “a PayPal” of the third millennium, a ubiquitous agent that surpasses the day-to-day interaction and connects to those virtual universes.
We want to be at all those bridges connecting the virtual experience to real life, because you will need to either extract money from those virtual lives or send money there and we want to be the gatekeepers of those interactions.
What is the plan for the expansion of ZELF? This year ZELF is live in the US, is Asia next with its huge gaming communities?
We launched our USD Visa cards less than three months ago. This step allowed us to onboard not only US residents, but international customers as well. We definitely want to become a global brand, not just the EU and the United States.
You are correct, Southeast Asia is the home to some of the biggest online games and crypto usage, compensating for the local financial system deficiencies. And Southeast Asia is also the market that we can disrupt by delivering banking services to a largely unbanked population. We are seeing a lot of interest from South Korea, the Philippines, Indonesia and Vietnam.
Have you ever thought of building your own metaverse world? A ZELF world?
We definitely thought about it, but we prefer to be in the “picks and shovel” business, rather than mining for gold ourselves – we will be the payment provider to the companies building the games and virtual worlds. They are the ones making brave bets on their unique metaverse experience, let’s say competing directly with Sandbox or Decentraland. They have to constantly innovate and invest huge amounts of money into developing new games, signing up new celebrities, etc. and that’s a very, very hard path.
I think that we have found a perfect niche that other Metaverse companies are not able to fill. They don’t have the proper banking background to handle fiat payments and to prevent money laundering and terrorist financing. And the big banks don’t want to do what we are doing, they are more comfortable in the world of current accounts and mortgages. JP Morgan and HSBC are nowhere close to being able to determine a customer’s creditworthiness for a buy now pay later in a game based on the number of hours played and the results in a given game.
We are excited and prepared for what will come next in the financial sector for gaming generations.