Corporate Vision Issue 10 2018

8 CORPORATE VISION / Issue 10 2018 , 1809CV40 Cryptocurrency theft has been an ongoing problem, as recently illustrated by a $60million heist of digital coin froma Japanese Bitcoin exchange in September 2018 and an earlier $500 million theft in Japan in January 2018. So perhaps it’s not surprising that the cryptocurrency community around the world took notice when Canadian-based VersaBank (TSX:VB) announced in early 2018 that it is developing a digital safety deposit box using blockchain technology, called VersaVault. Calls poured into VersaBank fromaround the world and news coverage was extensive, following the preliminary announcement. VersaBank : A Chartered Bank with the Innovation and Nimbleness of a Fintech Currently in beta testing and on the verge of being launched, VersaVault will enable customers to easily, safely and privately store their digital valuables, including cryptocurrencies, in this digital equivalent of a safety deposit box. It could be a game-changing solution to a community that has struggled with securely storing cryptocurrencies, while also offering a global market for VersaVault. It’s just the latest innovation and development of robust banking technology by VersaBank, a Canadian schedule 1 chartered bank that delivers comprehensive banking solutions by leveraging innovative technologies to address unique customer needs. “In many respects, we are the original fintech (long before the term was widely known), leveraging new and emerging technologies to address customer needs, but unlike other fintechs, we are a chartered bank with significant resources and low cost deposits,” says David Taylor, President and CEO of VersaBank. With the exception of VersaVault’s global reach, VersaBank predominantly serves the Canadian market, focussing on key niche markets that have traditionally been underserved by Canada’s large banks. This ranges from financing schools and hospitals in the Arctic, to developing a custom banking package for Trustees in Bankruptcy, to supporting small business and fintechs, helping to bridge the much needed financing for these businesses. “Traditionally, Canada is dominated by a few very large banks, so we carved out our role in the banking industry to be the innovative bank that would find niche markets not well served by Canada’s big banks; where we could fill the gap and provide real value to our customers,” adds Taylor. “For example, we play an important role in solving a financing gap for small and medium businesses, while also supporting other fintechs, through our e-commerce and bulk financing program.” Partnering to help small business, while supporting fintechs Taylor explains that it became apparent that the small business market was not being well serviced by the large financial institutions. So, VersaBank decided to partner with a number of organizations that are financing niche markets, such as fintechs. “Many of these fintech companies don’t have the funding or balance sheet of a bank, so this allows fintechs and other point-of-sale financiers to continue servicing their customers and maintain their customer relationship, while VersaBank looks after the back- office funding and administration,” says Taylor. “Our in-house IT group designed and developed state-of-the-art systems that allow us to process large numbers of these small ticket receivables, and our structure incorporates significant risk mitigation techniques in order to reduce net risk to bankable levels. Our success speaks for itself, where we’ve gone years with zero- dollar loan losses, a remarkable achievement for a bank!” The fintechs source the loans and leases and sell them to VersaBank. The loans and leases range from cosmetic surgery to car loans, from medical equipment to yellow iron equipment and into many other

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