Unstable
Made mostly as an excuse for me to chat with people I like about internet money(stablecoins), credit, fintech and anything at all!
Unstable
Fixing SME credit with stablecoins, better data and AI - Kea Credit
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In this episode of Unstable Pod, Mikhail sits down with Jo Dsilva, founder of Kea Credit, to talk about what happens when traditional credit underwriting meets stablecoin liquidity.
We discuss why SMEs in the Gulf still struggle to access credit, how Kea underwrites businesses that banks often overlook, and why speed and better data may matter more than simply offering cheaper capital.
We also get into:
• Why undercollateralized lending has struggled in DeFi
• What Kea learned from Goldfinch
• How Kea structures different credit risk tiers and yields
• Stablecoins as a funding and settlement layer
• Why banks could eventually become partners rather than competitors
• Lending with institutional and on-chain capital
• Kea’s ambition to reach $1B in TVL
• The longer-term vision of building an on-chain bank
A conversation about credit risk, real-world lending, stablecoins, and what financial infrastructure could look like when capital can move globally but underwriting remains grounded in real businesses and real cash flows.
Timestamps:
00:00 Intro & Jo’s background in traditional finance
01:40 Why TradFi and DeFi need each other
03:05 Why Kea Credit was started
04:38 Stablecoins as infrastructure for SME lending
06:36 What Kea Credit actually does
08:15 Why build the full lending stack instead of just underwriting software
11:20 Who Kea lends to & how SMEs are underwritten
14:42 Kea’s edge: faster credit decisions and capital
16:00 Making credit risk understandable for lenders
19:05 Risk-tiered vaults: from 8% to 22% APY
22:57 Why lending in the Gulf is different
26:12 Could banks become Kea’s biggest partners?
28:51 Why undercollateralized DeFi lending has struggled
30:12 What Kea learned from Goldfinch
34:04 Defaults, risk management & short-term SME credit
38:33 Kea’s roadmap and the $1B TVL ambition
41:51 Origination vs lending with Kea’s own capital
47:50 Crypto cards and borrowing against DeFi positions
49:54 The long-term vision: an on-chain neobank
51:48 The SME founder traditional banks wouldn’t finance
54:59 Closing thoughts: the $5.7T SME credit gap
Hello everyone. So this is the third episode of the Unstable Pod, and today I have a very special guest, Joe from Kia Credit. Yeah, welcome Joe. I think like as the first question, we'd love to learn a bit about your uh background um and what did you do before your current startup.
SPEAKER_01Thank you, Mikhail. Hi everyone, thank you, Mikhail, for having a great day uh based in Dubai. Um a bit about myself. Uh I spent years watching financial infrastructure from inside and realizing that one thing over and over again, right? Banks um are not bad at credit. Um especially when I when I say bank, because I come from a banking background, I was an investment banker. The last time I worked for someone was as a group CFO for a Swiss uh financial institution, uh, and then also the head of finance for a hundred-year-old company that's that I that had got uh clients everywhere, right? Almost uh close to 10,000 retail clients, only in the B2B clients, only in the UA, and then spanning over to other parts of GCC. So being in finance, being in uh in the field, um, so I've had opportunity to work in multiple industries, wore different hats throughout my uh career. Uh in terms of uh education, I I I am an LSE alumni, uh comes from a chartered accountant background as well. Um so you know, I've been uh throughout my life, worked in finance, uh built businesses, uh worked in core positions, and then steered the ship uh in in different institutions. That's a bit that part.
SPEAKER_00And like how do you think your background in finance has kind of like maybe um helped you shape your understanding of of crypto? Like why did you decide to like to uh to change from the tratify world into the crypto and like into the stable coins out of finance?
SPEAKER_01So uh Mikhail, the understanding uh is pretty straightforward, right? So so sometimes I've seen people in TratFi uh blaming what's what crypto or DeFi is about, and then you know vice versa. But I see uh there are strengths in both of this, and uh both of these elements are are the way I see it, it will coexist with each other, right? So uh it's not going to it's I'm not gonna say that it's one is going to come and replace the next, but it's going to be a beautiful uh partnership between TradFi and DeFi. And uh my experiences in TradFi has given me a huge deal of experience when I come and say that, hey, you know what? When I come into DeFi, uh I can I I bring a lot of experience from TradFi where I can structure things properly.
SPEAKER_02Right.
SPEAKER_01And and what makes me fly is is the decentralized nature of it, which gives me wings as opposed to the centralized structure. Uh the whole processes that I can set on a decentralized structure that gives me a lot of freedom and wingspan to take things to the next level.
SPEAKER_00So was there like a specific moment that made you know decide kind of move into DeFi, start your own venture, or did you just kind of like get into the circle more and more and more, and then there were like once like one time it maybe like clicked or uh so it was not random, uh to be honest, because um, like I said, um watching this financial infrastructure from the inside and realizing the thing over and over.
SPEAKER_01See, none of these financial institutions are bad at credit, right? So credit is something like we deal in credit. So and and these financial institutions are not bad at credit. What I've seen is they're drowning in processes. Uh let's say an underwriter in a bank in the Gulf spends most of his day uh assembling files and not making a judgment, right? And um what he does 80% of his time is making the file ready, keeping the things in order, collecting these documents. So the decision-making process is only 8% of his time. And I was I was thinking like, hey, uh let me start Kia because I understand this and my co-founders understand this. And uh let's do something. Let's make Kia. Kia started with a very simple belief that if you move intelligence closer to the data and the capital closer to the borrower, you do not need to rebuild banking. You just need to make it unnecessary to wait for it.
SPEAKER_00Interesting. So, like, kind of like what I'm hearing from this is like you're using stablecoins most as the layer to like collect and disperse the capital and just to be able to like build your own, like let's say, infrastructure much faster than like if you were to go like the legal, I mean the old like the banking route, like where you have like a lot of uh slow-moving parts.
SPEAKER_01Yeah, absolutely. You know what what I am into, Mikhail, is banking on the stablecoin liquidity that is being adopted more and more, right? So if you look at three years back, uh we did have a stable stablecoin market share of like let's say 3% as opposed to 13% now, right? So the growth is humongous, and there are more and more use cases of stable coins that is inevitable to happen. Kia wants to bank on that because you know, banks do have their liquidity, financial institutions do have their liquidity. And uh when we say uh stable coins, and uh we would want to say that we are much inclusive in structure. The reason being my LPs want to bring in stable coins and put their stable coins to work. But my borrowers, uh, you know, in all fairness, when I when when we lend to SME borrowers here, for them crypto means Bitcoin and Bitcoin means crypto. They don't know what is USDC. Uh they might know USDT, but they don't know what is USDC, right? But um things are changing. So uh they say, okay, Joe, you know, I do have real invoices, so why don't you do this? Uh I have bills to pay. I want DARHAMS or uh or Singapore dollars or US dollars in my bank account. So what we do is we do the seamless integration of receiving stable coins from the LP or the lenders coming in using our Rails, we convert it into into uh fiat off Rambit to the uh to the borrowers and we collect it and we do the reverse engineering back when it comes to repayment.
SPEAKER_00Got it, got it. Okay, I think this is like a nice um segue to Kia. So like if you could tell me in like in a couple of maybe sentences, like what is Kia's main idea?
SPEAKER_01Uh so uh Kia's main so Kia's main idea is to is to uh is very simple, right? Uh like I said, two things. We want to bring uh intelligence closer to data and capital closer to borrowover. For that, what we have done is to bring intelligence closer, we have done our proprietary AI model, which does the heavy lifting of underwriting, which actually takes time, right? Uh which underwrites course and passes it on to an manual underwriter, which will then be able to say that the company is bankable or non-bankable in 48 to 72 hours.
SPEAKER_00This is interesting, yeah.
SPEAKER_01Yes. As opposed to a normal underwriter drowning in files and coming after two to three weeks and saying no. Where, you know, on a traditional scheme, when a borrower submits his file, till the date he gets a yes or no, it's a black box. For us, there is no black box. In the first 15 seconds, we'll be able to know from the system that whether this file is worthy to push to a manual underwriter or not. So the decision is then and there. So there is no opportunity cost loss for a borrower. You know, you can actually look look at alternative source of finance. And once this is done, then we bring the capital closer to the borrower by matchmaking lender to a borrower.
SPEAKER_00Mm-hmm. All right. And actually on the question of like handwriting and credit scoring, I think there is a lot of companies that do like credit scoring as a service, like handwriting as as a service, right? They only provide like the APY, the the APIs, the like AIs, the like LMs and what and whatnot to be able to pass all of the borrowed data, and then the AI agent, let's say, does all the checks, they like, and then they um come compile some kind of pre pre preliminary answer. So what made you, I think, like go and capture the full stack with Kia as opposed to selling your software to different banks and to different lenders?
SPEAKER_01So, Mikhail, that's a very genuine question that we get. So we actually believed that uh putting it uh as a SaaS model and selling it to every other lender uh wouldn't actually move a needle, at least in the initial initial stages for us. We never thought of commercializing our AI model up until an institution uh which is a which is a community bank in the region uh is now we're in early discussions of piloting with them to to put this model in the bank to help the underwriters, to help their underwriters do these things efficiently, right? Why I said it never uh we we never thought of this particular model to move and move a needle. Rather, uh rather it acts as an independent function that will that will help Kia to minimize the biggest risk in the industry, which is credit risk, right? So everything as I I I always remember what Mike Tyson uh said, right? He he said something very interesting. Everyone has got a plan until you get punched in the face. So our underwriting model is something like a forward-looking tool that will help us predict default, uh be protected as much as possible, and then uh and then uh you know um then we let we'll we'll we'll be in full transparency to the lenders and we'll we'll uh then let the lenders choose choose what suits their risk profile. So um in future, now that the bank has come in to answer your question specifically, would we really look at uh selling this model as an uh as a SaaS basis or to every other lender? Yes, that that is possible. Um this could be the first step uh that we are taking now with the with a bank that is based in the region. Um yeah, you wouldn't be surprised that uh you know Kia FI is being used by different uh people. And in order to solidify this, Mikhail, what we are we are doing two more steps ahead. We are validating the model with uh with uh big four, uh making sure that you know the underwriting, the how the machine does underwriting is accurate, uh as accurate as possible. Yes. So so we are we are getting that validated by the Big Four and then getting double validated by one of the biggest auditors in the region, which is Big Ten.
SPEAKER_00Okay, this is uh this is really cool. Yeah. And could you tell me like how does a typical, I guess, borrower in Kia look uh look like? Is this like an SME or a bigger company? Like what is the nature of the business that uh that are borrowing from Kia?
SPEAKER_01All right, so um I would like to uh start by saying that we are industry agnostic. Uh don't hold me to it, but I might sound a bit hypocritical and contradicting when I say that, right? Even though we say we are industry agnostic, we closely watch as to what sort of industries uh have got different layers of payment. For example, if you take the construction industry, construction or real estate, you can see there are receivables, but these receivables are conditional to uh their progression certificates, uh to uh you know the timelines and there could be penalties and all those. So your payment is conditional to a lot of risk factors. So then we can lend for them, but the cost of financing for them could be higher as opposed to a general trading company that that trades in goods where this ship goods and they receive payment after a certain number of days, right? Uh so we're pretty industry agnostic, but we clearly uh watch the sectors where uh the the repayments can be risky. Also, um one thing that's you mentioned are those SMEs, are those like relatively big enterprises? We we've seen we've seen both, right? So when we see, uh especially when you when you take the Gulf region, uh especially in the UA, like uh w when banks come in, uh the risk appetite of the bank is you need to have three years of financial statements, management reports, and all those, right? But this three years is crucial for an SME. We understand that. Uh uh I I'm I'm a founder, so I understand, like, you know, in these three years is is where the growth happens, scaling happens, a lot of things can happen in these three years. As long as there is an asset, and this is where our our analysis or valuation comes in. We we independently value the asset that generates future cash flow. We independently value the company and the scale at which which uh the future cash flows of the company and the growth potential of the company, and we independently value the counterparties or you know the clients' clients from where the payment comes in. So that that's one of the metrics that we that we follow.
SPEAKER_00So if you guys like value the assets, then like it just helps you to not look at the cash flows as much so you are like more agnostic to like how good the cash flows of the company are. In a sense. And it's like yeah.
SPEAKER_01So Mikhail, we we we don't do anything very creative, right? Um uh like uh like the only creative thing is we we we underwrite it fast. 15 seconds, yes, bankable or not bankable. Uh why why I say that I don't do anything creative is because the whole process is still the traditional process, right? Uh we look at one thing and one thing only. You are taking the money from me. What is how is your asset going to generate this money and in what period? Do you have and will you have the capability at the so-called end of the period that you can pay my money back? If you are in within the line, you know, we I think it's it's a it's a bankable uh uh company.
SPEAKER_00Mm-hmm. All right. And then like, you know, like what would you say then is the biggest edge of Kia? Is it you know the aforementioned like speed that the borrower doesn't like lose time by like waiting in a bank? Uh so like then do most of your um borrowers have like a uh like a time like a timely need for money, uh or is it something else that like you know is the kind of main edge of Kia like compared to the banks in the region?
SPEAKER_01So the so the uh edge of Kia is is like I said, you know, uh the speed of decision making, the speed of pushing out the capital, uh, the speed of pushing out the intelligence to to the to the lenders. We wouldn't say that we are one of the cheapest. Uh we're very competitive in terms of rates, but uh the the speed at which the capital gets available to the borrower and the speed at which then the capital that gets to the borrower being used in the business and generate future cash flow, like you know, it's it's all very inclusive model, right? Because uh if my borrower gets the money, he can scale up, which makes money for my lender, and and that money that lender makes, we get the protocol fee. So it's a very inclusive model in that. So that that's that's a edge, right? So so yeah.
SPEAKER_00Mm-hmm. Got it, got it. Um yeah, and then like like a bit more on the underwriting side, like um what I guess like you know, like you guys do look mostly at the at the asset, right? Um, and then like how do you present this like data to a lender? Because, you know, I as you said Kia is kind of like a marketplace where you guys match lenders with the borrowers. Um like what are your guesses, like what are your uh what is your long-term vision? Is it still being like a marketplace, or is it somehow abstracting the data more? Because as I can assume, like as Kia grows and grows and grows, you guys will have like more and more deals, and like maybe you'll guys start having like some like packages of like you know, low-risk deals, mid-risk deals, higher and higher, high, higher, high-risk deals. Because I'm assuming that like a lot of lenders might be like in the end, right? They might be like even people who are who don't know how like a bank works. So, how would you accommodate uh them? And and like are you planning to accommodate someone like this?
SPEAKER_01Yeah, so um so yeah, um the answer to this is uh when it comes to data and what kind of data we push to um uh the lenders, right? So we want to make it very simple and stupid. Uh like keep it simple, stupid kiss, right? So uh being a finance professional, I I was always an advocate of finance for non-finance professionals because we cannot expect everyone to know finance. So we uh we push out data. So even though our AI model uses 200 plus risk metrics, which includes all the ratio analysis, geopolitical stuff, you know, the industry metrics, how the region is performing, and all those things are there, uh it it uses so many data sets and data points and and come to an MIS grade report. And this MIS grade report uh is designed in such a way that you know uh someone who is who is reading an MIS grade report, like A, the company A wants to borrow uh hundred thousand dollars from you, and this dollars uh will be used for this, and it's expected to uh and the counterparty is this, their payments have been at this uh coming in this ratio, and you know, they're you are protected by by this as a collateral, uh collateral A, collateral B, and if it's no collateral, then you know obviously there is no collateral. Um, and you know, you are expected to receive this, and the company have been performing this. So it actually tells a story, gives a narration as to why you should uh it it it it actually sounds like a pitch from the borrower to the lender, and then the lender can obviously go and click and look at very detailed reports. So uh it's going to give them a very detailed summary that basically tells them the story that why you need to invest into this company or why you need to borrow your capital into this company, and uh and yes, and like you said, you touched upon a point where uh you you spoke about uh the lenders coming in at different APYs. Yes, like and and you know when I said collateral or non-collateral, uh obviously we do have SMEs that says that hey, you know, we want to keep our treasuries in in we do have now a payment service provider who wants to uh keep uh a guarantee uh as USDC, right? They don't want to liquidate their USDC, but they want fiat and they're open to give. Uh the only condition is we shouldn't uh liquidate this this USDC at all. Uh and we should put it in a transparent platform. So um so that there are opportunities and these kind of vaults will come with a lower yield, but you can always be sure that the capital is protected and your interest mod interest coverage is protected, right? So so that there it's it's a hundred percent capital protected vault uh and the APYs can go up to eight percent, as opposed to what we have at the moment. Um uh uh a high-risk vault is performing at 22%. And this 22% doesn't mean that you know you do not have any collateral. They do have collateral, the personal uh checks, uh personal uh the the corporate checks, PDCs, everything are in place, but you know, we we simply think that uh the business is too young, uh, even though it generates future cash flow. But you know, when do when they do have this transaction history and when they start repayment, borrowing and repayment, you know, possibly they will get better interest rates. But you know, they're not being touched by the bank just because you know they don't have the three-year wingspan or uh on under their belt. So so you know that's where you know Kia steps in and and uh looks at it. Uh also, you know, uh we will we are we are we re we have close to one institutional uh liquidity provider uh in the region um who's who said yeah you you guys do something pretty interesting, uh the the APYs are good. Um uh let me start with uh $1.5 million. Right? So so he's pumped in that liquidity and it's it's working for him. So we uh we we also are looking forward like where institutions would be in lookout for uh lucrative yield propositions and uh not just the D-Gens or uh DeFi users. So uh our LPs, we we consider them as three different categories of LPs. One is the ultra-high net worth individuals or accredited investors, uh second is the institutions that include family offices, banks, or uh any other institution that have got uh they want do a treasury management. And third third one is uh the the D5 public or the other digits.
SPEAKER_00Mm-hmm. Yeah, yeah, yeah. And like which you like, do you think there's gonna be like a fourth um profile of a lender, like let's say a like regular person or like You're just gonna keep like strictly focused on the force. Because like why I'm asking is that I think always the cheapest cost of capital always comes like from the regular people. That's why banks funded such a cheap cost as something Kia is planning to do as well.
SPEAKER_01Yeah, that that that's that's that's definitely in the future vision because uh we bank on the whole uh concept that uh the stable coins have been uh going to be used or widely adopted by even the regular people in going forward. Uh so you know if people can put uh their money in the bank account for a small percentage of interest rate, uh now why can't they put into yield-bearing propositions that can be possibly put in different walls? Not just Kia, but any other protocols that are out there. So people would be looking at it and uh Kia want to be one of the uh frontrunners to to acquire that kind of capital and put that to use.
SPEAKER_00Mm-hmm. Mm-hmm. Got it, got it. Yeah. Um you also, I mean, uh Kia is most uh like Lenin in the UAE. How would you say credit like there, maybe in like in the Gulf region as a whole, is uh I mean is is like doing credit there different to doing it somewhere else, like let's say in Europe or in the US, and then if it's different, like what is the I guess main difference that makes uh that you know that that makes it special, I guess?
SPEAKER_01Yeah, so um three things that makes Gulf different from the US or Europe. First, the population is very transient, right? Roughly 90% of the population are expats. Uh they build they build businesses, hire teams, generate revenue, uh, build the financial system, treat them. Uh and you know, sometimes the financial institutions, right, uh not blaming them, but you know, they have to do what they've got to do, but uh the bank has to do that because they treat them as temporary residents. Um traditional credit models were built for people who have been in the same country for 30 years, right? With a with a mortgage, yeah, with a mortgage, with a with a FICO score. Uh that model is meaningless here. Secondly, uh collateral worship. Banks in the Gulf region overwhelmingly overwhelmingly lend against collateral. Uh property, deposits, bank guarantees. I'll give you a small example of a bank guarantee. If you if you want to get a bank guarantee of a million dollars, then you will have to have a million dollar plus as deposit, right?
SPEAKER_00So so it's it's over 100% collateral on a bank guarantee here in the why uh why the plus list is like so weird because like if you have money in the bank, shouldn't they give you the guarantee for the same amount of money?
SPEAKER_01Uh uh not for the same amount of money, but they uh also have to tap on to the to the interest portion of it, right? So they just not only want to protect the capital, but also on the interest portion of it, right? So so that that's that. And if you do not own a real estate, uh you are largely invested to the to the banking system, right, in terms of a bigger collateral. That it that excludes the majority of SMEs from formal credit that that are in the early phases, which is exactly the 5.7 trillion global gap that the World Bank uh keeps pointing at. Um third one is uh relationship banking still dominates. Uh decisions get uh get made in room, not in models, right? So yeah, yeah. So this is not inherently bad, but it does not scale. So it does not scale. Uh you cannot serve 131 million underserved firms worldwide with relationship banking. Right. So it's it's it's literally impossible. What Kia does is replace the collateral dependency with uh verifiable cash flow intelligence and and replace the uh relationship bottleneck uh with a protocol that any lender can plug into. Uh we are not fighting, uh please don't get me wrong. We don't we are not fighting with the with the with the banks here. We're building the layer that is that is missing. That's all.
SPEAKER_00So like can like potentially the end game for Kia be like working with banks? And and how do you think this can look like?
SPEAKER_01Yeah, so uh Kia can be an excellent originator for a bank. And we we we just got validated a couple of weeks back when uh when we met with a bank and they said, like, hey guys, you know, you do something very interesting. We we cannot do that as a bank. We cannot do a lot of things that you you're doing, like underwriting. Yeah, right. Uh what you can do is we do have uh and we cannot actually do uh do stable coins. The banks are not not actually equipped to do stable coins yet. They will reach there. But what they are saying is if you have like bankable companies, share the files with us. Let us look at it because we need more deal originations. We have liquidity, we can bring in liquidity. How to bring in on-chain is something that we need to uh that Kia needs to discover how we can do that.
SPEAKER_00This is very interesting, yeah, yeah, yeah. Uh like do you think like like what do you think is the stablecoin adoption in uh in the UAE, like especially in terms of banks? Because I I think like a lot of us, well, everyone knows about Airborne, that they are uh the first like stablecoin bank to get a charter license in the US. Then I think there's like one one more bank that's like going there. Um from my own experience, I know that in Central Asia there is a number of like um, I think there's like one CEX in Uzbekistan and like one in Kazakhstan that are all like um looking to get a license. So is as like some stable coin native banking um do you like or do you see like any kind of stable coin native banking attempts happening in in the Gulf region as well?
SPEAKER_01Yeah, so uh so very soon that's going to happen. You know, stable coins in uh United and Abdelham's is going to come. Uh we we uh being in the region, we bank on the leaders of the country, their visionaries, right? I I've not seen uh a region or a or a country that grows this fast, right? And uh it was nothing at one point of time, few uh a few decades ago, and now it's like it's like someone used a magic wand, and you know, there is the there are buildings in the middle of the sea, there are the the there are real estate developments under the under the sea. A lot of things are coming. Uh it's a very inclusive economy, and the the like I said, the leaders are visionaries here. They they adopt fast, they move fast. The decision making is one of the fastest globally. Uh so you know, um it's it's coming fast. Uh and that that that's much I can say as of now.
SPEAKER_00Yeah, this is really cool. Okay. Um yeah, I think now it's a super interesting question. Um, I see like, well, let me just share my screen. I think I see one of the um tweets that Kia has pinned um talks about the how over-collateralized lending um is dominating uh DeFi, right? And how Kia is actually like developing as it's like an AI engine, allowing you guys to underwrite loans and like then allowing to have under-collateralized loans. So I think right, part of I think kind of the skepticism can be that that um Goldfinch had the same, I think, exact model and spectacularly failed. So like if you like have you guys like learned anything from Goldfinch's model? Um and just kind of like what is your like take on maybe why um so far there haven't been any, I would say like there haven't been any like solid attempts in DeFi at undeclarized lending for SMEs, right? Because there is like some lending, like human and credible, but they're all like they mostly do payment financing, which is I think a to a totally different beast to SME lending. So like maybe just kind of like your opinion, like the history of SME lending on-chain and maybe like why it hasn't worked uh yet to the full extent.
SPEAKER_01Yeah, so Mikhail, you know, anyone who's coming from the TradFi or banking background, um seeing the default rate of Goldfinch, uh, which was in two digits, was already alarming, right? And when they said, hey, we've reduced the default rates to 7%, that's even very high. And I know entities that are based in Singapore do not want to name them. Their default rate are in point in decimal places, right? And they manage it so well. Um and Goldfinch is a classic example, what what any protocol that that tries to come into this industry should should actually learn from. Uh, because Goldfinch made a bet that community trust could replace credit analysis. Uh-huh. Yeah, that's that's that's a beautiful idea. Uh, but it's a terrible underwriting policy. Their model relied on backers to due diligence, right? But those backers were often DeFi participants who never had underwrit who never had underwritten a loan in in their real lives. Of course, yeah. Yeah. There was no standardized scoring, no independent counterparty verification, no continuous monitoring. They essentially crowdsource the hardest job in finance and hoped conviction would substitute for competence, right? So uh what what we built is the opposite. KFI is a purpose-built credit assessment engine that that wrote every file through entity, asset, and counterparty, like I said, you know, three different sorts of verification over over over hundreds of signals. Every borrower is scored before before even a single dollar moves out because we are accountable to our to our lenders. Uh every loan is also re-scored, Mikhail, because today if you if you borrow from us and you want to borrow from us after three months, because we look at your cash flows, what what has happened to your cash flows in these three months? Because because you know the business also has cycles that decides, like today I can lend you $100,000, but in your in your lower cycle, I can I can lend you possibly $50,000 and not $100,000, right? So these are the parameters that we actually look at. But here is the structural, and here is also the structural difference that matters the most. Kia do not pull blind capital into opaque deals, right? Our vaults are risk-tired. Uh a lender sees the asset type, the risk rate, the redemption period, the APY before they commit. A capital-provided stablecoin vault, like I said, is at 8%, is fundamentally a very different product from a non-collateralized lending vault, which is at 22%. What Goldfinch has done is Goldfinch gave everyone the same pool and made them pray the same prayer. Right? So we we we we give every lender a clear menu and every borrower a fair assessment. Uh the the the lesson from Goldfinch is not on-chain lending doesn't work. The lesson is that online lending with that without an on-chain on-chain credit underwriting is just a very it's just a faster way to lose money, Mikhail. And when we do this credit underwriting, we want to bring this risk and reputation on-chain because we want to see the bigger picture for the industry here. But tomorrow, anyone who has done this credit underwriting and they have an on-chain score, they should be able to take the score and show it to other LPs or other protocols and be able to get the money. So we are seeing a bigger picture here.
SPEAKER_00Very interesting. This is very uh very interesting. Uh yeah, and um, I mean, you uh have you like at uh Kia, have you guys had any defaults? We're too early for that, Mikhail.
SPEAKER_01You know, fingers crossed, we uh as of now we don't have to.
SPEAKER_00I mean, of course, of course.
SPEAKER_01Uh and and you know, I I I would be uh very since we uh like I said, you know, why why am I iterating on the fact that you know we we come from a traditional banking background, so we we uh are very careful of that. Um we are not trying to uh say that you know the system I'm I'm I'm very tired of these cliche terms like the system is broken. The system is not broken, the system is there, it has been like a proven system for years and years and years. Okay. And you just want to do things differently, right? So um we we don't have any any loans yet, uh any any bad debts yet. Uh rather, you know, we we we uh carefully select, we we see the repayment capacity. Yeah, we try to get as much collaterals as possible, and then you know, we we do lending.
SPEAKER_00I mean, this is very impressive that the guys have been able to like lend the 22, like that guys have been able to return 22% to your LPs and then still have like no no bad data. I mean, this is this is very impressive, I think.
SPEAKER_01So so Mikhail, the the thing is this, right? So uh people would go crazy thinking like, hey, uh this 22% is is you know what kind of companies generate these kind of in GB margins, right? But but but uh the trick is not that. We we try to lend them for shorter periods, which means anywhere between 30 days to 180 days, now we can even go up to so we uh the loan should should show as a a short-term liability in the balance sheet, not a long-term liability, right? Um and when it comes to 30 days, 60 days, 90 days, and if you if you are at a at 12% APY, you basically are paying, if it's 90 days, you basically are paying 3% as cost of finance, like 1% per month. Right? So it's not like you know the the uh in an APY level it's it shows human gas, but it's like you give a short-term finance, a bridge capital to the SME, they work and turn around that money, generate the revenue, and that that revenue or the cash flows will be able to pay it back.
SPEAKER_00Yeah, yeah, fair enough. Like I think banking character makes it a bit more affordable to to the SME for sure. Um yeah. Like are the are the like SMEs, I guess, taking those kind of like more expensive loans? Like what is their like what is their nature of risk asset status? Like it's just mostly due to the fact that they haven't been like on the on the market for as long, like for three years, um, and therefore they're not able to get credit from from from a bank so they come to Kia. Um, right? Like, or I'm actually also like I'm curious to learn, like, is there anyone in the Gulf region that's doing something similar to Kia, but like without stable coins? Maybe there are like some uh specialty lenders, like some uh private lenders who are also trying to bank the SMEs.
SPEAKER_01Yeah, so so there are. Uh I mean, we are not without a competition. There are players that are in the in the region that does use stable coin as well as not, right? Uh how how we are different in the totality of the processes for us from the time of origination till the time of disbursement and repayment and even the on-chaining and risk and reputation, everything is on-chain. While for the competition, they still do not have yet. And and and we we do not think that you know no one will get there because uh anyone with a great uh tech team can actually do that in a in a matter of time, right? So and we want it to be there because we want more and more transparent uh players in the market that will protect more and more LP capital. And when that happens, there will be believe me, we want that to happen because there will be a lot of capital that will flow into these kind of players, including Kia. So we we want that to happen, right? Um and and we don't we don't see we don't see competition as uh competition on the on one side, but we see what what we would like to see is like there's a great product market fit and there is a lot of scope for us to to actually you know grow. And there is uh uh there is cake, uh a piece of pie for everyone. And uh Kia is like is getting there.
SPEAKER_00For sure, for sure. Okay. Um and then like I think this is like a good segue to like um Kia's goals. What would you say is the biggest goal for Kia uh for I think like for the next year?
SPEAKER_01Alright. Um so uh before I say next year, uh I I I would say the grand picture, right? The grand picture is obviously to hit the a billion dollar TV L in five years. Uh uh being said that, um the 2026 milestones matter the most for us. You know, that that's that's where we want to prove uh the flywheel actually spins. Right? So uh this year uh three things have to open, uh have to happen. Uh first is uh we're looking at institutions to come in and uh look and validate and use our underwriting layer that will that will help us to put a lot of SME data on chain and help these SMEs tomorrow to access to global capital regardless of Kia, uh regardless of Kia to with any other uh protocol. Secondly, we uh so everything revolves around lending. Secondly, we also rolled out uh last week our settlement layer that is that that can actually um that can actually work with uh forex companies, payment service providers, or even e-commerce merchants, gaming merchants that can acquire in in multiple cryptocurrencies, 18 different currencies in uh from different chains, Bitcoin ET, both both stable and not stable currencies, um convert it into stable instantaneously, uh without being without touching their funds, act as a non-custodial uh non-custodial service provider. Well, this is uh instant settlements to the merchants. Uh if they want in in stables, if they want in in non-stable currency or and if they want in in fiat trails, we can we we are now have the partnership cap uh we have entered into partnerships where we can do that to 94 countries. Um also, you know, we we we we are now also in talks with uh B2B service providers, like payment service providers, that we can use now USDC as the settlement layer and do instant settlements to their merchants as opposed to T plus 1, T plus 2, T plus 3. And and make a make a small percentage out of it. So uh that's that's point number two. And uh one of the most important things is we've we've been quite successful in that to bring in one institutional player to to pull in the liquidity. We want more and more institutional players to come in, look at these real-world yields, you know, uh allocate their capital and and uh and where they can they can read the smart contracts, verify the scoring, and and and say that okay, this is the infrastructure that we can we can uh deploy our funds into. So these are the three things that is crucial in in the year 2026-2027.
SPEAKER_00Mm-hmm. Okay. And like actually when when you were talking about the like uh underwriting as a service part of Kia software, like this got me thinking, what is actually kind of I guess more profitable, it's better for you guys to um have the end game as Kia being like in origination layer, or to have the end game where Kia like does both like the origination and the funding? Like I'm asking this from the point that I think most of the banks in UAE, since they fund from deposits, like their cost of capital is like probably much less than than Kia's. Um and like if you will just like I guess give like the secret sauce to like all of those banks, then it might be like it might just be a bit difficult to compete with them and to provide a good deal to your uh lenders. So how do you kind of see this this this this inter interplay?
SPEAKER_01That's a that's a very, very interesting question, and this is something that we strategically always discuss among the core team, is to have our own in our own liquidity because the verticals that we have carefully or strategically placed um at uh you know being being performed like you know, if they perform optimally, then we would generate our own set of liquidity that we can deploy. Because if we have our own liquidity, uh our revenues will be, you know, pifold. Uh e even not bifold, it could be trifold. That is where the real money making comes into play. So if we stand as an originator, we still make protocol fees of three percent of uh uh if if if uh for example a lender makes 12% gross APY, uh nine goes to him, three comes to Kia, right? So three comes to Kia. Uh so we we we the minimum is circa three percent, right? So uh but if we have have our own capital, we we can then deploy it into different uh highly collateralized world and still still make a percent purely for Kia. So that that's that's huge revenue. So that's also where where we are heading, you know. So you know, to to generate our own liquidity and to deploy our own capital.
SPEAKER_00Mm-hmm. And like how are you guys pricing the I mean, or like how are you planning to price the SAS model?
SPEAKER_01Um so as of now, you know, we don't want to price it. Honestly speaking, uh, we want to uh see, I've thought about you know uh in in BIPS to to price. Like you know, I've uh I've seen the I've seen how this KYC, KYB uh companies actually do price different, you know, verification processes and all those, right? And this being a much more important tool that involves actually someone putting their money based on trust uh could be on a on a on a higher price model. So it all depends, right? So but we've actually not put a price right now. What we are doing is when we are piloting with these uh big mega institutions, uh we want to say that it's a great privilege that they are coming in and using our product, right? It gives us more validation, and once that pilot is over, uh possibly that we will our first pilot, we will let them price ourselves. And we are gonna take any price for that because you know the the biggest reward that we have already got is the amount of data data that my system will actually train together.
SPEAKER_00Yeah, yeah. Definitely, definitely. Interestingly, so like I think yeah, like Kia is like also very very much so like a data business. And I think this is like very bullish, like especially in the current AI world where data is everything. If you can just get like those um some data that no one else has access to, then you can potentially price it as expensively as you want it, right? It's just thick, it's yeah, absolutely super huge. Yeah. Um but in general, would you guys be like would you guys be aiming to um like what is your first focus, I guess, being the SAS layer for like uh more and more and more and more banks and having like as much data, or it's getting to this like 1 billion in TVL for for Kia? Or like how you plan to work on them like in in parallel to like let's say keep your to still keep your like defaults um hopefully at at zero.
SPEAKER_01Yeah, uh Mikhail, you know, uh so uh the focus will always be on the core revenues and to see uh how we can uh do things efficiently to to to to not have defaults. Uh defaults is is is is by default, you know. I'm not going to say, sit and say that you know there are there are not going to be any defaults in Kia. But the yeah, there will we are in the lending business, so that it it's one of the metrics in in lending business, right? So but our focus is always going to be uh on on revenues, generating more capital, generating uh you know liquidity for Kia itself so that it can reinvest and it can generate more and more capital. So uh we wouldn't uh we will be uh SAS model, yes. Uh we have like I said, you know, we've never thought of commercializing it. And if at all we think of commercializing it, then I would think that we would have a uh different team totally to look at it because we do not want to dilute the core team's objective. Because then you know we'll be we'll be shooting, because right now, uh Mikhail, we do have someone who's dedicated for lending, uh someone uh in the settlement, and when the card uh cards come, we can have like co-mingling because it's got a lot to do with lending where people can come in, put their positions and and borrow against it. So it's it has to go do with lending. But when the SaaS model comes, I wouldn't actually mix this team with that because you know then there'll be a lot of dilution that that's happening in terms of uh business objectives. So you know, we'll have a different team to take that off completely.
SPEAKER_00Interesting. Actually, on the card piece, um is it going to be like a business credit card or um uh so so first what we are what we are doing is um so the like this is uh so two things, right?
SPEAKER_01The initial rollout phase will be it's going to be just like a debit card where you you'll top up your crypto and then you can use it anywhere. And this is not something new. A lot of cards are out there. You know, uh we are not doing any value addition. But the value addition, what we want to bring in is um now there are there are a lot of people out there uh who has got different positions in different protocols, right? So for example, there is Bons, SorcerSwap, um uh especially we we we're built on Herera, so that's why I'm naming Herera projects. But uh so uh the the and people who have positions in this, whenever there is a need, the the first thing they go and touch is they go liquidate their positions.
SPEAKER_00Uh huh, yeah, yeah.
SPEAKER_01So what we want to do is two things. If you have an if you have a need, then don't go and liquidate. You can you can bring the positions as collateral and borrow against those positions, right? We will try to match some sort of LTV. And uh, you know, uh it will have everything like like like you you leverage the stock, it will have margin calls and everything. So rather immediate liquidation, you can actually have the option to keep your position and then repay it back. Secondly, we also want to help these people, uh the DeFi public to do an interest arbitrage. So you can you can you can actually uh take your positions, you can b come and borrow against it, and then the borrowed capital you can redeploy into maybe Kia's vault that give a higher possibility and get that's you know interest arbitrage out of it. So you know these are things that we are we are thinking out loud. But you know, it's easier said than done. There's a lot of work to do on that.
SPEAKER_00Yeah, yeah, for sure, for sure. Yeah. Um actually, um like also kind of the card piece got me thinking. Um, are you guys planning to build more stuff around like Kia and make it maybe like into a neobank? Because like when you talked about the card, Alec merely thought of uh Brex because Brex also they their core uh I think like the core piece of Brex was actually credit for startups, and that's how they managed to acquire all of those customers and then get them into their um bank and ecosystem. Uh so like has is as is like the broader banking piece something you guys uh thought about?
SPEAKER_01That's that's that's a long-term vision, uh Mikhail. That's uh there's a grand picture that that we keep quiet about. Uh but you know, since you brought this up, so uh we want uh we are envisioning ourselves uh in in the future to to be that new bank where everything is on-chain, you know, verifiable, transparent. So uh so right now we do we do have the lending wing, we do have the acquiring wing, and uh we we will have the spending wing. Um in a matter of time, we supposedly, you know, uh we we gain enough trust, we gain enough uh momentum, uh where we are one of the names there in the market where we where people can come in and uh deposit. So, you know, we want to be there.
SPEAKER_00Awesome, awesome. Yeah, I mean, I think you you guys started with the hardest piece in general. I think lending is like one of the hardest things about building a bank, and but but but at the same time, right? I think lending is what actually makes a bank real because right now with both consumer and business near banks, you have so many different options to just build one uh in a couple of days, like maybe with like cloud and and bridge, that it's hard to differentiate. And I think actually credit can be one of the strongest differentiating factors at of any uh bank, like on-chain and off-chain.
SPEAKER_01Yeah, yeah, yeah.
SPEAKER_00So this is this is certainly uh very cool. Yeah, I think like one of the last um questions is like, as you said, you spend a ton of time in TredFi and Finance and IB, and then you still went like to build finance on chains. So what makes Kia fun feel? Like what what what makes Kia tick?
SPEAKER_01Alright, so uh the the fun moment for me. Um the moment a founder who's been told no by every bank, uh, you know, for three years in a row, gets a scored assessment pack that says their business is fundable, not because we did them a favor, but because the day data said so, right? So there is this founder that I that I met in Dubai who runs a logistics company, 15 employees, solid contracts with tier one clients, uh growing revenues year on year. Every bank turned them down because you know, A, he's an expat. B he doesn't own a property in the UA. Uh three, he doesn't have the finances. He was just completing the three years, so he doesn't have the entire financials ready or uh audited by the prime auditors. In the old system, he never existed, right? In our system, uh his assets exist, his invoice exists, his buyer exists, his his cash flow exists. Uh he gets a grade that reflects reality, and there there is no bias in that. And that that's that's a fun part, uh, that's a fun part. We are not we are not building uh financial technology for the sake of technology, we are building it because the current system is architecturally, I wouldn't say incapable, but you know, there are restrictions that they have to overlook because the risk appetite of them demands them to overlook. Uh, but we see those people who actually uh build these SMEs and these SMEs drive the the economy, right? The fun fact here is see the SMEs contribute to fifth um to 50% to the GDP and 79% to the employment. So we look at those metrics.
SPEAKER_00Wow, yeah, yeah. I actually didn't know that that that SMEs have like such a that SMEs can comprise such a big part of the GDP. This is insane. Wow. And the employment as well. I think is it is it like specific to golf?
SPEAKER_01No, it's uh so we're focusing on three regions. Um uh we do have a joint venture in Singapore, so soon we'll be uh servicing Singapore, and soon we'll be Malaysia. So I'm saying about UA, Singapore, Malaysia combined.
SPEAKER_00Oh, okay, gotcha. Yeah, I think it's it's like totally, I guess, very different like to um maybe like to stuff like Europe or DCS, because I think in like in there, like the majority of people actually work in like huge corporations, and yeah, it's it's it's like a very novel piece of in information for for for me that 80% of the workplaces can be provided by by the by the SMEs.
SPEAKER_01Absolutely. Yeah.
SPEAKER_00Okay, cool. Yeah, um, it was a huge pleasure having you, Joe. If you have like any closing thoughts, if you have like anything you want to tell about, um then yeah. It's the time.
SPEAKER_01So, Mikaelino, again, thank you for having me. Uh and two things I want uh to leave uh people with, right? The first is the 5.7 trillion SME credit gap is not a charity problem. It is the single largest misallocation of capital in global finance. The businesses that drive half of the GDP and and nearly the employment, the 80% of the employment, as you said, in the emerging markets cannot access that one thing that helps businesses grow. This is not a market inefficiency. Uh this is I wouldn't call it as a system failure, right? Uh so we want, uh like I said, you know, we want intelligence closer to data and we want capital closer to business. And the second thing, the second thought is crypto was was supposed crypto wasn't supposed to be about like a financial uh inclusion, right? Somewhere along the way it became about trading, somewhere about the way it became about speculating. But now things are more clear. We are building that that what it's supposed to be, like re real credit, real businesses, real economies, uh connecting global capital, cross-border lendings is easier than it used to be. Like it's going to get more and more easier, and the real use cases of crypto is now coming. And more and more adaptation of stable stable coins are there in the market. So if you're a if you're a lender now, you can sit in the US and and lend uh for a real asset in Dubai. So for an SME founder, you know, he can sit here and you know borrow from Africa. So you know that so banks cannot do that. And this is what Kia is for. Uh, and this is what protocols like Kia is for. So these are the two thoughts that I want to leave uh people with today, and you know, wishing everyone a great day.
SPEAKER_00Awesome cheers, guys.
SPEAKER_01Thanks so much.