Not many startups boast as their founder an entrepreneur whose previous company is a multi-million dollar success. And not many startups have as their stated mission changing the way all financial instruments are traded while reforming the global banking system.
But Lykke is such a startup.
LeapRate is very pleased to present an exclusive interview with Lykke founder Richard Olsen – known to those in the Retail Forex world as the co-founder and former Chairman of OANDA.
1) Hi Richard. Please let our readers know more about Lykke, and how you came to the idea for the company.
Lykke builds a global FX marketplace, where institutional and retail traders can trade. The Lykke marketplace will make many innovations. Traders will be able to trade at ultra-low cost and will not be captive to any one broker. They will be able to transfer their assets at any time. Today, this is not the case. It takes two and more days to move assets from one broker to anther; this is a serious issue during a Lehman-like crisis. Traders will be able to move assets at any time. We will be able to offer this thanks to the distributed ledger technology pioneered by Bitcoin. The distributed ledger technology is one of the greatest innovations in recent history; the system can be used as a global notary service to record financial transactions in near real time. We will deploy this technology to build a highly efficient marketplace.
The idea for the company has been germinating for many years. Already in 2001, OANDA launched a trading platform with second-by-second interest rate payments. This was a mission statement to reform the financial markets and overcome arcane business practices. I have been on the lookout for how to reform the banking system for literally decades. It was only in 2011 that I discovered that the technology of Bitcoin was ‘the’ solution.
2) What key problems is the company addressing?
The existing banking system builds on an infrastructure with encoded business processes that assume manual processing; this is why delivery and settlement of transactions takes two and more days. The outdated business processes add complexity, increase risk and lead to higher costs. At the end of the day, it is the trader, who is exposed to the increased risk and pays the bill. I want to build an efficient marketplace with immediate settlement. I dream of building a global marketplace that works as seamlessly as the heart in the human body. Few of us are aware that the human heart pumps 70 liters of blood every 10 minutes; this is our benchmark of performance.
3) How does Lykke solve those problems?
The distributed ledger technology pioneered by Bitcoin is ingenious. We use this infrastructure to build a trading platform, where a large number of market makers can market their USD, JPY, EUR coins, etc and quote prices. Users will be able trade at narrow spreads and have immediate settlement. They will be able to trade at literally any size and small increments. There will not be any price discrimination for small traders.
4) Do you think that you can really locate the key developer(s) for Lykke through the contest you’re holding?
This is a good question – I have good reasons to believe that we will succeed. There are a lot of highly gifted and experienced software developers in emerging countries and other countries. In their home countries there are not very many exciting startups. I expect that there will be strong pickup, but the proof is in the eating.
5) Now that you’re no longer involved at OANDA, we’d love to get your former-insider’s impression of the Retail Forex sector. A lot of change has happened in 2015 following the January Swiss Franc crisis. How do you see the industry today, and moving forward?
The retail industry has reached a temporary plateau; in recent years we have witnessed minor innovations, but nothing ground breaking. There is still big potential for innovation. By 2018, I expect a complete transformation of retail trading comparable to the transition from an old Nokia mobile to a modern smart phone. The trading experience will be new at all levels, very exciting.
More on the Lykke platform design challenge can be viewed in the following video: