Stablecoin Neobank for Asia: Tarun Mangukiya on KOSH, Freelancer USD Accounts & In-House Compliance

Value transfer is nothing new. Hunt, gather, trade, expand. An exchange that's older than instant, where the strongest prevail and the fastest survive. The function remains as its form continues to accelerate forward.

Awesome. Well, we I'm I'm interesting because you guys have kinda went through a a rebrand change of identity. You were Copper X. You were for a while there, again, you you were you were doing the neobank thing before being a neobank was cool. So talk to us about kind of the why behind CopperX, the market you're serving, and and the evolution to to Kochester Sands.

So, like, we started with a crypto payment gateway. Right? And our thesis, basically, like, was when we jumped into or when we understood blockchain as a as a concept, right, we realized that this is, like, back in '22, right, when technically, like, are a handful of consumer applications out there. Right? And we're like, you know, blockchain enables us to, like, make money global, but there are no apps that regular people can use. Right? And by regular people, what I mean is, like, non Web three people. Right?

A person, you know, earning in even dollars or in local currency, right, trying to spend somewhere. Right? So we started the crypto payment gateway,

the vision was This is how this is how I first met CopperX.

Because at this point this is when this is when CopperX was doing side by sides with Coinbase Commerce on on why they were better, and I was selling coinbasecom commerce. So CopperX was kind of the the interesting competitor I was learning about. It's interesting how you guys have like, what what what thesis, I guess, did you originally have in in that kind of checkout paradigm, and how how have Stablecoins kind of come in and evolved that or grown that?

I feel like you guys and, you know, there was a really interesting cohort of builders in that in that part of the stack. Some have gotten acquired. Some have, you know, fallen away, CopperX, and what and how you've evolved into Koche now. It's an I'm sure you've you've built so many interesting pieces of architecture. I'll stop asking the questions and let you respond, but I'm excited to hear more about the evolution. No. I agree. Like, Coinbase Commerce was

obviously our, like, initial inspiration. Right? And we we wanted to build something like strive for crypto where, you know, it's like, whatever, like, Stripe did for card payments, that was the same thing that we wanted to do with crypto as a mode of payment. Right? And at that time, we did we were not that much that much aware that, you know, stable like like, where stablecoins are going. Right? Because stablecoins were mostly used for as as a liquidity for trading back in those days.

Like, everybody like, we all were holding ETH, BTC, Solana, and all that other tokens, but stablecoins were for sure minority compared to that. I think somewhere $80.85, 90 bill total market cap. Right? So pretty easy. It's pretty small compared to that. So we started with the crypto as a payment mechanism or or a payment gateway. Right?

And we what when when we checked out Commerce, we realized that, you know, there are so many things that could have been built that's missing for a regular person to, like, even receive, like, receive a payment. Right? So if you're a merchant merchant and want to receive crypto payments, you cannot easily do it. Right? So we started with that, and then we obviously evolved into. We we realized that the market for as a payment gateway, it was very small, tiny.

And from there, we started understanding more about stablecoins, payments in general. Right? And yeah.

Which way Turin, what what underlying infrastructure did you guys like, did you build for that use case that has now become almost like I was gonna ask about that too. Advantages that you could you can now almost lean on your own rails. What does that look like? Yeah. And what advantages does that bring? So, I mean, for the for the from the payment gateway part of you? Or just anything. I mean, I'm I'm imagining you spent years building infrastructure, and now you're almost building an application.

I'd imagine there's, like, really interesting stuff that you've built that you can now almost use

yourself. Yeah. For for context Yeah. I would in this segment, we like to dive into the the build versus buy dynamics. We'll kinda wrap with some Yeah. Some rapid fire questions, but that's really what we're thinking because we've seen in this neobank segment. Some people go from neobanks to infra, and we've seen people go from infra to neo. So, yeah, I think that's that's the inspiration behind this question. Yeah. So

for like, so in in terms if we talk about, you know, product offering or tech. Right? We have we obviously, at at a payment gateway, we built many things that we are seeing now, even, like, a lot of blockchain trying it out. Right? For example, like, deposit addresses that temporary recently released. Right? We already had that.

Like, we we used to, like like, when we when we had a payment gateway, every single checkout, it had its own unique deposit addresses that you can easily reconcile that works across any chain, any EVM network for that matter. Right? So they build a lot of this infrastructure. And right now, also, like, under the hood, like, we like, as long as, like, is there, we have every other thing This is what we're talking about. Yes. Correct. We we already had, like we already have this in CopperX checkout.

Because that's how you solve for attribution, like, where payments were coming from, what products were they associated to. Yeah. Yeah. Okay. So we we actually are going to, you know, reuse the same set of infra for things

like invoicing, payment links that we will be adding for freelancers in. Right? So we we came from that. Like, so we have built a lot of tech that's there under the hood that will power various features in in and out for Kosh. For example, the wallets. Right? If you go and check Kosh wallet, every single account is a smart account. Right? So, like, all of this is built by us. But if you talk about, like, you know, why from Kosh oh, sorry, CopperX to Kosh, the major reason is, like, our background. Right?

So me and my cofounder, Dalpar, like, we are coming from a casual background. Right? So we obviously tried for so, a, like, the market was very tiny. B, we are casual founders. Right? So we wanted to build some that has a good brand, which can like, we we wanted to grow using market like, market led product rather than, like, a typical sales sales funnel growth. Right?

So that's why, like, recently, we brought into Coach where we are more focused on truly who we are, which is, like, you know, product founders doing crazy marketing and GTM campaigns, right, and, like, playing with, like, mass number of segments, like, basically, like, unique segments rather than, like, onboarding, you know, hundred, two hundred, 300 businesses. Right? So, yeah, so we are we like, by fundamentally, like, we we basically, like, we are going into that direction, which we really love.

We love to, you know, play with pixels. We really, really love to play with brand identity. We really love to play with crazy marketing that you'll see in next couple of weeks that we're doing.

Yeah. I was gonna ask that. I was like, so is this crazy marketing, is this what you're cooking up? Have you already done some crazy marketing? And you're just like It's coming. Okay. It's coming. So stay tuned. That that that that'll be part two. We are delayed for a couple of things that's pending in process

by one or two two two weeks or so, but, yeah, it's coming. Where do you think Teams building in this new bank

what, like, mistakes do you just see the Teams making over and over and over again when it comes to to go to market and their and their positioning?

Do you think people are just stuck in just doing the same thing over and over again? I think that is happening. Right? So there are, like, b two like, if you're building a a business stable bank, people like, we are trying to go into the consumer. Consumers once our founders are trying to go into b to b. Right? From our end, like, we obviously, like, had also had, like, a b to biz like, a coach business accounts, but we are not marketing it anymore. Right? Because and then, like, we want to play with the consumer.

Right? So if you ask us, like, we want to be a product like Cash App, where for for anybody and everybody in Asia where, you know, people like individuals or small businesses, they can easily, like, receive money, send money, it pretty easily. Right? Because that's what our bread and butter is. Right? I I feel like, like, my fundamental thesis is, like, you know, like like, we are here fighting with I mean, not even fighting.

Like, we are trying to sell the market, which is either underbanked, right, or sold by traditional banking. Right? I think yesterday only, like, we saw a couple of tweets where, you know, we just have, like, scratched the surface when it comes to even neo banking, not even, like, stable in neo banking, but, like, 3% of global payment volume out there. Right? So this is a massive opportunity out there. And when we look at Asia, you can legit count the number of

neobanks that's out there in in this region. Yeah. Yeah. Why do you think Asia is, like I don't wanna say, like, behind in this trend, but, obviously, we've talked with a lot of neobanks. Latin America, obviously, off the charts. You you, you know, you've seen a few popping up in in Europe, but, you know, Mica has made this a little bit harder. Africa obviously has a strong footing. And Asia has always been like that. Like and we also do Asia. And we serve a few countries that, you know, in Southeast Asia.

Why do you think it's historically kind of been under targeted, and why are you saying, hey. This is a market that we're taking in. I feel so I feel like I mean,

you know, like, all so, like like, in last twenty years, right, like, the the neobank as a segment is pretty new. Right? It's just been, like, ten, twenty years max. Right? And US has been, like, a starting point or West has been, like, a starting point for a lot of this product. Right? Brexit, Revolut, Stripe, every single company out there. Right?

In Asia, we have seen, like, couple of them, but the thing is, like, you know, when we when when you look at, like, serving Asia as a market or even, like, non US Europe market, right, the compliance that is required to build in this region is pretty tricky. Right? Because you're like, most of not like, some, but, like, most of your compliance tools, they fail in the in the region. Right? Because either APIs are not available or the data is not well available. Right?

Or a lot of people, like, they have similar names which flags PEP on a regular basis. Right? So what happens is, like, for any existing even banking product in The US, like, for them to provide even USD accounts, it's not that big of ROI. Like, it has not been that big of ROI serving compared to, like, serving US as a market. Right? Now we are in a very mature stage where we are seeing, you know, companies or even banks providing dollar accounts to everybody and anybody. Right? As long as you can hold the USDC.

Right? So now the the good part is, like, because every single person in Asia, they want to hold dollar to fight inflation. Come like, what we are trying to do is, like, we are trying to go deeper into the compliance here, which which can be native to this particular region. Right? And even, like, we are also going in niche in there where we are trying to build custom compliance tools with lot of AI automations, using a lot of AI automations and agent agentic workflow for the local market for all the freelancers. So

So I was gonna say, actually, on on that note, we have, like, a few rapid fire questions we like to ask in this segment. These rapid fire I usually do these, like, right at the end, but I actually wanna do them now since you brought it up and because they always inspire a few questions. I know on Drew's end,

I'm not saying anything. So

so we're gonna I'm gonna but Drew's now I heard the rapid in the rapid fire. My I I mean, yeah, less rapid. Get time at the end to ask your follow-up questions. So, Terron, the way we've been doing these, like I said, answer in short, either one word, one quick sentence. Drew, I'm either gonna skip that one that that it and we have a question about which which vendor you would rip out tomorrow of switching costs for zero, and that that one has constantly been a, hey. We're skip this one. But he's like, yeah. Nope.

Not answering. No chance. But we'll ask a few other ones. So first one is No. Please do. What's the You can ask that one. Okay. You can ask that Okay. You'll you'll let me know? Okay. You don't have to say the vendor, but you can say the broad categories. That be safer. I I have a I have a follow-up question for I like follow-up answer for that. But yeah. Maybe I'll maybe I'll close with that one. So first, what's the one thing you built in house that you would buy today if you could? Water services.

Wallet services. So, Bloody, that'll be our one of our follow-up because that seems there's probably a lot to unpack in there. What's the one thing you bought that you wish you would have built?

Some of the compliance tooling.

What's the single build or buy decision you'd redo if you started over today? I think first and second question, like, I kind of answered that. Right? Like Yeah. They're very similar. Yeah. What's the one one layer that as you're building a neobank, you should never outsource and you should always build in house? Compliance. Compliance? Alright. The the last one that has a follow-up. So which vendor would you rip out tomorrow if switching costs were zero?

As a reminder, does not matter anywhere. Like like, honestly, any like, the vendor does not matter here.

I'll I'll I have a pretty good insight there. That's why. Please. Go go for it. Well, that was the last one. So that one, we can we can riff off of, and feel free to come on. Because yeah. So I'll like, my thesis here is

this market that we are serving. Right? People or freelancers, individuals are seeing money. They are paying three, four, five, up to 10 bips to receive money. Right? For them, we're charging even 50 bips, which is, like, the highest. I mean, you might kill me for this, but, like, that is the cheapest for them. Right? So for me, like, if a vendor is charging me one bps, two bps, 10 bps, right, it does not make a significant difference because my margin is pretty high. Right?

Because for for the end user, we are doing a marginal improvement. Right? We are bringing the cost down from 1010%, which is, like, thousand thousand bps to, like, 50 bps. Wow.

But so they're just paying the We're not even in the bps zone anymore. A thousand bps. Yeah. I know that one. We're in percentage zone.

It's crazy. People charges yeah. People charges 5%. Right? And on top of that, they charge 3% on FX. Crazy. So it's not oops. Go ahead, Drew. Go for it. No. Was gonna say, so, like, do they are I'm I I always like, I'm just thinking the perspective of a consumer. I'm using an app that charges me that. Like, is the problem right now that truly no other solutions existed? Is there a monopoly in this market where even if other other solutions exist, they just get crushed?

Is this a has this been a go to market problem for everyone that comes out, or is this

It is like if you if you are a if you are a company based in US or Europe and trying the way you told me. Right? Like, Asia is one of the market for you. It's not the only one. So the moment you start seeing high risk or your tools or compliance tools not being able to manage that, you just cut off that region. Right? So the challenge for this region has always been reliability. Right? Like, we have seen, like, every three months, any new bank, like, they just keep changing their policies just because of risk rules.

Right? On top of that, when you look at, like, dollar offering by any infra provider, you talk MoonPay, Iron, anybody. Everybody's offering dollar, like, USD accounts to on them pretty easily. Right? But the thing is, you like, like, they need a provider in Asia that can tell them that, hey. You know, risk is on me. Right? I'll handle all the complaints, but I can give you, like, legit filtered profiles of the users, and I'm confident on on them on on this. Right? Then they will be ready to take the risk on you.

Right? You you just, like, look at the data. Right? So what we are trying to do is, like, we are we are serving these freelancers by building up their profiles with twenty, thirty different social scoring. Right? And our agents, like, you know, the moment you get onboarded, like, our agents are there put to work for each and every profile. Right? So even if even before you do your first transition, transaction, like, I can let you send, like, a document

documented PDF of yours to any provider. Hey. You know, like, tell me how this is not ready for user. How how mean by social scoring? Yeah. Yeah. What is that, like, link your x account? Is this link your Anything. Yeah. Like You do I don't know. What what social accounts is this? Is this, like, again, specifically for desires?

Like, this is is this proof of work? Freelancers. Yeah. Proof of work. Yeah. More like proof of work. Yeah. And so that serves as their new resume? Kinda reminds me about Yep. What we were talking about at the top of the show with fair scale.

Yeah. That's what I was that's what I was getting towards. Like, is this gonna give them credit? Is this kind of all the above? This is not in

even for credit. Right? The problem is in this region, every three months, the new bank changes is because they cannot handle the risk anymore, right, because of the fraud that's happening. Like, what we are doing is, like, we are telling our banking partners or our our on offering the partner that, hey. You know, whatever profile that we are sending, we have done, like, a legit reputation score on each one of them. Right? And there are legit no chances of or very less chances of risk in this profile. Right?

So you can trust us. You can ban all other products out there from from using your APS, but you can fully trust us. Right? And this is why I told you. Right? What should like, one thing that any neobank should build in the age of AI is some of these compliance tools. Right? So you have, like, a fixed set of compliance rules that, you know, that is being processed via some server, couple of other tools. Right? But you need your own like, you need to think different here. Right?

You cannot keep using the same rules that or some same set of things that you are doing in US or Europe or or some of these regions. Right?

What was the downside of doing this or, like, outsourcing this part of the stack more heavily than you've realized? Like, what was the downside of it? So the moment you start outsourcing this, what happens is, like, it works for two, three months, which makes

everything seem fine. But the thing is, like, you know, people figure the way out. Right? So in couple of months, the risk becomes higher for anybody who's serving the region, and then you do not have time to build this particular thing, right, or this particular piece of the puzzle because you are already at a scale. Have you start with know if this falls into

outsourcing or not, but we we met with CipherOwl recently. And for at least the way they're positioning the product, it seems more like they're trying to help founders or teams like you build out owned compliance systems and plug into these types of things. Are you familiar with CipherOwl?

I have not seen CipherOwl, but I have to one of the two companies. The only thing is, like, you know, I think, like because these are, like, not just like, now all these tools are, like, just fast tools, so it should be easily accessible. Right? Like because most of, like like I mean, like, you you know, like, most of AI tools are manual process under the hood. But, yeah, I I'm sure, like, we will see something like this coming into the picture in in in a year or so, like, pretty pretty heavily. Right?

Because this is needed. This is, like, the need of the hour for everybody, not just us, and anybody and everybody. Yeah. We we've definitely heard on this segment. This is not the first time we've heard build compliance in house.

This is probably, I think, the most popular answer of that question we've gotten. So makes a ton of sense. Glad that glad that we also come to the same learning as everybody else. So

Yeah. Yeah. What's what's next? What's next on the road map? Are are you guys live with the consumer app? Are you in early

beta? Yeah. We are live with the consumer app. We are obviously, like, improving some of the onboarding flows. We already have two to three consumer campaigns planned. I think maybe one of them might be visible on x. The rest of them are not on x. It's a very local I mean, not not offline one, but, like, like, non like, crypto Twitter and marketing that we are looking into. Right? So yeah. I mean I mean, let's agree. Like, you know, like, the one of the largest sort of neobank out there is from Asia. Right?

So she would say neobank is very easy. No.

I was actually talking. I don't know if you've ever heard of Axle. There it's interesting. Like, when we I I asked myself this question of, like, what actually is a neobank? Like, is a neobank a savings? I guess, like, when you think of Wealthfront, for example, Wealthfront is like a bank, but, again, they've they're sitting in a very different spot as, like, a spend account. But then there's, you know, there's neobanks that are for spend. There's neobanks that are for peer to peer payments.

There's neobanks for freelancers or for savings. And Axle is one that comes to mind where they're more focused on, hey. We don't I don't even think they have a card, you know, associated with their account right now. It's purely save USDC, save in Bitcoin. They even have save in gold. I'm excited to have Ash back on because they've found their footing. He's like, yeah. We do most of our marketing on TikTok. Like, we're targeting the the 20 year old, you know, people that are just starting savings.

Like, we're not trying to rip Yeah. People away from, you know, their high yield savings account. Like, that's just not who we wanna serve. So we're gonna go where they're at. And, you know, that begs the question. Is there Reddit? Is there you know, could you go on Facebook groups and find, like, random freelancers

within your local communities? Many of them. Yeah. WhatsApp groups, WhatsApp communities, Facebook groups. Right? And they are hungry. Like, they really want a service that just works. Right? Yeah. Yeah. Listen. There are many of them. And and the good part I mean, not a good part, but a different part here about Asia is, like, you know, lot of people, are active on Instagram, TikTok, Facebook groups, even WhatsApp community. I mean, I have rarely used WhatsApp community, but, like, people are there. Right? So

and that's one of the reason, like, I have to, like, now restart using WhatsApp. Right? Because, I mean, I I you I use it rarely, but I'm telling you. Hey. We're not the same. We're we're in the same boat. We were in Mexico City, and we're like, I guess we should all use this. You know, we had teams from out of the country too. And Yeah. Yeah. But, man yeah. I'm actually really. Yeah. The the go to market is interesting, especially, I think, when you go even not even just off chain, offline.

You know, what are the local activation things you could do? We were just talking about the the billing for me. So, Antarine, it was great. It great to dive in. We wish I I've been looking forward to shoot me a text or something when you guys launch some of these campaigns off of off of X so I can just just take a look at them.

I'll share. I'll share. Guys are cooking up. There some of the there are some of the good ones. Right? We, you know, we we are like, I would say, like, we are we are trying to be as as I said earlier, like, we are trying to be more like Cash App. Right? Where, like, it should be fun, like like, a I mean, I think there is no use case if you are just solving for payments anymore and building a consumer product. Right? The the the product has to be a fun product, like, I mean, for people to use, to people to show.

Right? And the new generation really loves that. They are okay you're okay to pay fees. Right? Like, you're talking to one of the user, and he the person was like, you know, even if I need to, like, pay 5% to OnRem into my Crypto card, I would love to use that. Right? Because I would love to show it on. So it's a different market marketing idea. I mean, like, look at, like, Cash App one. Right? Like, crazy one. Like, I think I would The payment wand? Yeah, man. Like Yeah. It's so cool.

And, you know, surprisingly, there there there were one or two companies in Asia.

They used to sell that thing. Right? They used to sell, like What what worked about this? Like, you know, as you're thinking about big splashy things, Cash App wand, like, what what is the recipe here that you're trying to crack? So people you know, so the thing is, like, people

like, they're I I talked to many folks, and they are like, you know, like, payments are payment apps are fundamentally boring. Right? Like, I mean, why would you keep opening your payment app every single day? Actually, you need something better than that. You need to go maybe five step ahead of what the existing apps are doing. Otherwise, you know, like, there is no difference between a banking app and your app. Like, you are just offering the same thing, different UI

or maybe similar UI. Yeah. This makes me think about, like, x coming into, like, the neo banking space. And for me, I just always like to it just makes me think about, like, what do I want out of a a neobank? This is hilarious. Yeah.

I'm opening this oyster. What do you think is gonna happen? Oh, it's a pearl. It's so far. See.

Right? I've never even seen this. It should be I mean, I have, yeah, I have not opened up a landing page, by the way. But, yeah, I think there are so many things that we can do in the payment category. Right? Like, in spend analytics, it's it's boring. Like, let let let's accept that. Right? Nobody likes the spend analytics after AI coming in the way it is right now. Right? We want a better, like, way better version of that. Right? We want you yeah. Know, like, AI can help a lot here. Right?

So, yeah, the goal is to, you know, like, make payments fun.

Payments. Make payments fun again.

So one of one of our team member, he says that, you know, like, cards and payments, like like, these products are a lifestyle product. They are not a they should not be a payment they should not be treated as a payments product anymore. Right? And the thing the good part is, like, we are really good with all of these things. Be like, because we are coming from a design product background. Like, our previous company, like, it was one of the largest design resources marketplace out there. Right?

So, like, we have worked on, like so, yeah, we are just, like you know, we want to make payments fun, and Asia is a good market for that. People really want fun things here. Obviously, everywhere else. But yeah. Yeah. Excited to see more.

Yeah. Send us send us if it's a physical thing. Send it to us, and we can

show it on the show. That'd be fun. Yeah. Yeah. Yeah. Awesome. Alright. Thanks for coming on, Tarun. We'd love to have you on in a in a few months as as, you know, you continue to grow and evolve, and maybe we can do a postmortem of of how do these go to market campaigns went. But appreciate you coming on to Neato today.

For sure, man. Sounds good. Pleasure talking to you. Bye bye. Bye.