ARYZE spoke to Co-CEO of JP Fund Services Fund and Financial Advisor, Networker, and Strategic Business Development Expert Peter Kristensen who shared his thoughts on finance, management, business ethics, technology, and ICOs concerning STOs. Peter started his long career in Denmark, where he earned a degree in Business Economics in 1993. His global expertise spans across Europe, notably in Switzerland and the U.S.
Fascinated by the financial world, he kickstarted his path aged 20 by working as a trainee at a small Danish bank. We asked him what he learned about himself and the financial world during these early days of his work life, to which he responded:
One of the most important lessons you can learn in finance is that you do not compromise on regulations. You do not take any shortcuts because, in the end, it will come back and bite you, so even if in the beginning it takes a longer time and more resources, playing by the book pays off in the long run.
Peter´s background has always been in finance, particularly in the area of investment advising. Originally from the Municipality of Greve in Copenhagen, Peter moved to Aalborg for 4 years to work in a savings bank. He ran a little department and was one of the first people to do technical analysis in Denmark, which he claims was not very popular at the time. When asked how he ended up working in Switzerland, Peter responded:
People didn’t like technical analysis back then because it was new. You actually had to read books and most people preferred easier paths. One day a good friend of mine saw me sitting there in Aalborg FX while evaluating a company that was called Danalyzer, and he said ” You should be talking to this person in Midas”(which today is known as Saxo Bank). So I started there as a trader in sales and ended up as the Co-Head of sales-trading and analysis department , before getting shipped to Switzerland to help a bank there turn its business around.
He was assigned to work with Synthesis Bank in Geneva, now Saxo Bank Switzerland, to establish their online trading world. When Synthesis Bank attempted to go online, they did not know how to do it or what to focus on. However, Peter was there for a couple of years and, together with his team, turned it around by doing it “The Danish Way,” when asked what this meant exactly, he explained :
Synthesis Bank wanted to go online but they did not know how to set up the right strategy before we got there. We turned that bank around by doing business the Danish Way, which consists basically on hard work and many relevant services framed around a consumer-centric ethos
JP Fund Services
Peter left Synthesis Bank to start his own venture together with other business colleagues in 2007. JP Fund Services (JPFS) came to life in Geneva and is a global investment firm providing risk-balanced solutions to financial institutions, professionals, and private individuals. They specialize in alternative asset management structures and products and the new, emerging digital asset classes (blockchain and crypto). Today, Peter is based in Naples, Florida, where he runs the North American operations and continues working with his significant European network and clientele.
JPFS, uses technology to provide direct access to new markets and proven opportunities by simplifying complex processes and allowing clients to build their paths towards financial well-being. When asked about the beginnings of his entrepreneurial journey, he responded :
One thing leads to the other. You are employed, have a good job, and pays well, but on the inside, you always want to be your own boss and benefit from what you actually do yourself and have the freedom to do what you want rather than what you are told. Obviously, it takes money and experience to start your own venture successfully, but I did Ok working in Saxo and the Swiss Bank and was ready to take that step. It´s all about finding the right people to work with that share your vision and ideas, this is exactly what we did in 2007 when we created JP Fund Services.
However, JPFS did not always follow the blockchain path. When he first got introduced to Bitcoin’s world by a visionary and influential friend, Peter was initially sceptical and critical of digital assets. He recalls how it all began:
I got introduced to Bitcoin in 2014 by Lars Seier, and I honestly thought that the concept was absolutely crazy at the time. I looked at it from the perspective of a normal investment banker. I frankly did not think there was any substance behind it and did not give it much thought.
But then came 2016, and it totally changed his mind. Peter started looking into the technology behind Bitcoin (blockchain) and its potential to revolutionize the old-fashioned finance industry. It rapidly became apparent to him that the future of banking would sooner or later be impacted by it. He explains what he felt at the time :
When I looked into what blockchain could do, it definitely blew my mind because this technology meant that I could see within a certain period of time, 50% or 60% of my colleagues inside the financial world would lose their jobs simply because the technology would deem them obsolete. That is when it hit me, and I started taking it seriously because you cannot stay behind when it comes to innovation, just like evolution – you must adapt or else you will perish.
We asked Peter, about what makes JPFS unique when compared to its competitors. He responded:
We are the only ones doing what we do, to my knowledge. However, JPFS funds was conceived with the idea of democratizing professionalism in the digital markets trading by making it more accessible to the general public, we call it digital multi-select. For example, when private individuals want to get into crypto, but they are not really skilled nor knowledgeable about it, so they wish to get in touch with the professionals- they soon find out that unless they have USD 250,000 to invest, they will be completely ignored.
We wanted to change this, and what we do instead at trademakers ( a JPFS brand) is that we bring professionalism to private individuals for a minimum investment of USD 2,500. JPFS is the risk management layer to all managers participating in digital multi-select. Based on the essential principle of respect for other people´s money, JPFS identifies traders with the right attitude and risk profile.
The art of deploying old knowledge into new technology
There seems to be a widespread concern these days in the business community that there is an irreversible and increasing trend demanding technical backgrounds in every field, rendering those who do not have the necessary technical backgrounds obsolete. The financial sector is not exempt from this concern and technology´s impact on it is increasingly transforming how the financial industry operates by generating entirely new business models such as crowdfunding, peer-to-peer lending, online investments, digital currencies, mobile banking, and new payment systems.
When asked Peter, how his expertise or so called old knowledge, can be implemented with blockchain he responded :
I am not a technical guy, on the contrary. But I like to use old knowledge in new technology because the fundamental principles are still the same. There is no difference in terminology; risk management, ethics, high morals. All these things are still the same, just utilizing new technology, and in the end, it all boils down to respect and ethics. For example, USD 5,000 could be a lot of money to someone, and at the same time, it could also be nothing to another, but you still got to respect other people´s money.
If you got respect for other people´s money, you do not incur unnecessary expenses that, in the end, might be detrimental to growth. I utilize my knowledge and bring common sense and business ethics by keeping both feet on the ground and reminding people that the most important thing is not to have the newest iPhone or gadget but actually to develop a business, go to market, and put money into the pockets of investors, that for instance have invested in the business.
For Peter, it is pivotal to be at the forefront of technology and smarter ways of accomplishing results; however, he also emphasizes the importance of regulations. Pointing out that innovation should be seen as a natural aspect of a competitive system; therefore, the ideal policy approach is to find an appropriate balance between preserving the system’s safety and soundness while allowing financial institutions and markets to perform their intended functions at the same time.
The gap between innovation and regulations in the Financial Sector
Complying with regulations is expensive and can potentially drive some companies out of business. For example, a novel data tool called Regdata developed by scholars at the Mercatus Center at George Mason University in Virginia (U.S.) has measured the impact that regulation might have on certain businesses by analyzing the 103 million words in the Code of Federal Regulation in the U.S. They essentially count how many regulatory restrictions apply to each industry and how much more regulated those industries have become over time. While these studies represent data specific to the U.S. economy, it nonetheless serves as a fine example of quantifying the adverse consequences of regulations on a given economy. A paper based on the data tools concluded that doubling industry regulations leads to a 9 percent decrease in business start-ups and, consequently, a 5 percent decrease in new hires. It is common knowledge that innovation is normally associated with uncertainty; meanwhile, banks tend to be associated with high security.
When asked about the role that regulations play, Peter responded:
I like regulations because they protect the end-users, so I believe that there should certainly be regulations in place whenever and as long as necessary. Nonetheless, it should be carried out soundly because excessive regulations can also kill entrepreneurship. Financial regulations are neither inherently good nor inherently bad, and navigating this highly regulated industry requires experience and expertise.
For example, there is a saying here in the U.S : You don´t mess with the IRS, the SEC, and the NSA. Those are the three ones that no one would like to mess with. This is why, when it comes to the finance industry, you should not take any shortcuts.
This dissonance between innovation and regulations in the banking world can be illustrated by company culture in the traditional banking system and the public´s perception of the bank. Their image has to be all about security to inspire trust in end-users. Essentially, it is challenging to find the right balance between the risk that innovation presents and security in a highly regulated and risk-averse industry.
The need for tearing down silos in the Financial Sector
Banks are traditionally siloed organizations. This hinders communications and cooperation and consequently leads to a decrease in growth due to limited scalability and increased customer dissatisfaction. According to a study performed by the Umeå University in eastern Sweden, positive results in customer satisfaction are not solely tied to the prices of the offered services, but also an understanding of the client financial needs, and the offering of relevant products that bring tangible value to the customer, as well as the feeling to be appreciated as a client.
When we ask Peter about the company culture in the banking sector and why is it difficult for banks to implement new technologies, he responded :
Banks and their technology are old-fashioned. For instance, when you look at the U.S. components, the American banking infrastructure, is significantly more outdated than the European banking structure because when you build up banking and it is 50 years old you use building blocks, but they do not communicate due to the fact that they use separate independent systems. Things are then siloed because all the elements are not built on different technologies. There are around 5,200 small banks in the U.S. today (50 years ago 24,000), this was due to some old rules and different states had different rules, and licenses terms also.
Of course having a small bank can still be profitable but not enough to afford the development of new technology and make way for a new system, because banking is still so old-fashioned, I mean we still write checks here, right ?
It is a massive challenge to turn around but not impossible and since the U.S generally offers such an innovative and creative space, I am sure that once it gets rolling, Americans will embrace the technology very rapidly.
A seamless flow of information sharing will benefit financial organizations and other institutions in several ways. Actionable intelligence technology, such as AI and blockchain can help banks in connecting their disparate systems onto one cohesive platform, enabling for more communication and cooperation between them. But how long will we have to wait to see the impact of emerging technologies such as blockchain on the financial world ?
Peter believes that the tides are turning around slowly in that direction but the impact is yet to be perceived in the financial sector. He explains :
The significant impact on the financial industry caused by blockchain and other similar emerging technologies is yet to come at a large scale. There is still a great deal of skepticism and aversion surrounding blockchain but if you compare it to the time when Saxo Bank developed online trading, I would say that around 95% of the knowledgeable folks in the area back at that time said that it was never going to happen, the words – “You will fail”, were commonly uttered but the visions and execution of the CEO´S proved them wrong.
They argued that people would prefer to trade on the phone and be inclined to more personal interactions- that was actually what we all were told. But look at it today, it´s all online trading. That is what I think blockchain is going to do with the financial markets and with ARYZE as well, this is where it´s going to change everything and it will take time.
STOs were created after the stringent crackdown led by the SEC and other individual countries over ICOs that have scammed people around the world. We asked Peter whether the regulatory shift from ICOs towards STOs has affected his work and he replied:
Not so much at the current time. I mean, the cost for running an STO is enormously expensive in the U.S as we speak and the regulators are still treading cautiously. But the STO market is here to stay and will certainly be bigger than anything else we see today. For example, imagine if you could tokenize your own house ? You would not be reliant on a bank loan as it occurs now. I believe this is the way in which things are gradually shifting towards in the future.
This belief in the potential of the tokenization market led him to join Idoneus team where the CEO Jarrett Preston has many years of experience in the financial field of barter trading. Idoneus is basically a closed economy withinside luxury goods and Peter has been involved in this project for the last 3 years, Idon is Idoneus token and provides for now, liquidity inside the ecosystem where you can currently trade diamonds, yachts, art, real state and more.
A project like Idoneus is very interesting because if we look at it today, we are probably going back to something similar to the old barter trading but with a blockchain component. That is a bit like blockchain in the sense that it is an instant settlement, Idoneus is a project reinventing access to and the value of luxury, making it simple and easy for luxury assets, goods and services to be purchased, sold, rented and more via the Idon token based on blockchain technology. Idoneus have already built a multimillion USD portfolio.
Blockchain and the online trading market
Blockchain technology has the potential to transform companies, governments and even society for the better. It offers great investment opportunities for investors who can identify the right companies, and although its impact on the online trading market is still very nascent, blockchain nevertheless could make stock exchanges much more efficient through decentralization and automation.
We asked Peter´s take on blockchain and online trading :
I don´t think blockchain has changed the online trading yet. It is still to come; we just have a new asset or a new thing we can trade and that´s it. I think everybody will be using blockchain in the future without even knowing it, because it is simply the technology behind it. Now you can actually transfer value in an instant settlement with an instant finality without all the intermediaries.
This is where I think a company like Concordium for example, will benefit massively because they already have the infrastructure in place to meet these demands for regulatory compliance, privacy and verification of identity such as in KYT (Know Your Transaction) to identify potentially risky transactions.
To learn more about Peter Kristensen, connect with him on LinkedIn, or check out the website of JP Fund Services. If you’d like to read more about crypto, blockchain, and tokenization, check out our blog or visit our website.