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Fintech Functionality: Cogent launches blockchain-based banking

Mark Parker



Mark Hindley (left), managing director of blockchain innovation for Cogent Bank at the Tampa Bay Tech Festival on May 19. Gabe Higgins, co-founder of BlockSpaces, looks on. Photo by Mark Parker.

The financial technology sector continues to grow throughout Tampa Bay, yet many people do not fully realize its applications in everyday life. We’re highlighting the companies and leaders utilizing fintech solutions to solve problems and increase business. This is the Functionality of Fintech.

Keeping pace with an increasingly digital economy, a community bank will soon allow businesses to utilize the only blockchain-based, real-time payment platform fully integrated within the U.S. banking system.

Founded in May 2018, Cogent Bank focuses on providing flexible, innovative and forward-thinking services throughout its eight locations across Florida. Mark Hindley, managing director of blockchain innovation, lives in the Naples area but spends a significant amount of time in Tampa Bay due to Cogent’s Clearwater and Tampa branches, and the region’s rapidly growing fintech industry.

On June 20, Cogent Bank’s partnership with TassatPay will go live, providing businesses with fast, secure blockchain-enabled payment capabilities, even after typical banking hours.

“There’s no bank in Tampa or Clearwater doing – to my knowledge – the breadth of what we’re going to be able to do,” said Hindley.

Cogent formed after a group acquired Pinnacle Bank, which Hindley said was “under some distress,” through the Federal Deposit Insurance Corporation (FDIC). He estimates that Pinnacle’s assets were less than $50 million then, and Cogent is now “in the neighborhood” of $1.3 billion.

Hindley called Cogent’s growth over the last few years “pretty impressive” and said the bank differentiates itself by thoroughly understanding the blockchain and cryptocurrency industries. That includes a firm grasp of the risks, dynamics, fund flows, decentralized organizations, blockchain integration, protocol development and node infrastructure.

“So, we’ve been able to craft internal policies and risk mitigation that allows us to bank, and want to bank, with these certain kinds of blockchain and crypto companies,” said Hindley. “There are certain risks associated with these kinds of clients, but we feel very confident that we’ve been able to mitigate those risks.”

Cogent, said Hindley, is aggressively building its infrastructure to accommodate its clients in the blockchain and crypto space. A large part of that is the new partnership with TassatPay.

TassatPay is a payment platform created by New York-based Tassat Group, which received a 2021 Google Cloud Customer Award for innovation in financial services. In December 2021, the company unveiled the nation’s first real-time Digital Interbank Network, allowing banks to instantly transfer funds using blockchain technology. Tassat describes the network as a highly secure, private payment instructions and settlement platform only accessible by member banks.

“We see massive upside for a bank being able to offer a blockchain payment rail,” said Hindley. “Number one is obviously going to be availability.”

Hindley said Cogent Bank is “very bullish about blockchain as a payment rail.” Photo provided.

Hindley noted that blockchain payment rails operate continuously without relying on the federal wire system or the Automated Clearing House (ACH) network. Unlike a wire transfer or ACH transaction, blockchain settlements are also unchangeable.

In addition to availability and security, Hindley said blockchain transactions are more cost-effective compared to legacy systems.

“Our system … is substantially less cost than sending a wire transfer,” added Hindley. “We’re very bullish about blockchain as a payment rail.”

Hindley explained that companies within the blockchain and cryptocurrency industry need to execute trades and settlements of digital assets in real-time. Unlike traditional systems, blockchain payment rails do not limit the number of funds a company can move after typical banking hours.

He said that uncapped, open availability is an attractive option for business-to-business payments within the supply chain, import-export, and real estate industries where transaction speed and finality are critical.

Blockchain-enabled smart contracts, said Hindley, allow for instant settlements without needing various personnel to review and authorize payments.

“No checks, no wires, no ‘it’s in the mail’ and no going out to the mailbox,” he said. “It’s immediate, with all the benefits of the blockchain.”

While those are the initial benefits of business-to-business use for the new payment rail, Hindley said Cogent is exploring other projects, such as digital asset custodial management. He said once the bank has custody of the digital assets, it can then provide an automated borrowing system.

Hindley noted that the current lending process is tedious, with a significant amount of paperwork and manual input. He said borrowing against crypto and digital assets is much more efficient than traditional methods.

“We think that being first to market and having that leading-edge advantage – not just in blockchain payments, but with digital asset merchant acceptance – we think that’s a very powerful combination,” said Hindley.

“And I think what’s really important to understand is that when you look at our bank and … our size, we’re a community bank.”

As a local financial institution, Hindley said Cogent delivers personalized attention and service while offering innovative solutions. Although Cogent focuses on the business applications of blockchain and cryptocurrency, it continues offering traditional banking services tailored to those companies and employees.

In addition to personal mortgages, lines of credit and checking accounts, Hindley said Cogent offers wealth management for founders and “some pretty cool loan products that were designed more for the fintech types.”

“We view that as our niche, as our value proposition,” added Hindley. “Being the white-glove, high touch bank for the blockchain industry, and for the players who are building in the space.”

Hindley said Cogent enjoys a banking relationship with Tampa-based BlockSpaces and several other blockchain and crypto-focused clients throughout Tampa and St. Pete. He hopes to continue building relationships throughout the region with companies involved in every aspect of the industry. He stated that “we are open for business for clients that fit our risk profile, and those clients certainly do.”

Regarding federal regulations, Hindley said there is not a lot of clarity from the governing bodies, as the blockchain ecosystem evolves faster than regulators.

Hindley said Cogent relies on the Financial Crimes Enforcement Network (FinCEN) for guidance, supplemented with exhaustive analysis it conducts with regulatory partners, consultants, attorneys and advisors. He added that Cogent is very confident that its policies and procedures are more than what is required. While he understands the apprehension in the blockchain and Web3 community regarding regulations, he believes clarity is a good thing for the industry.

“If it’s done right, it will be nothing but a huge catalyst for growth,” said Hindley. “So, I am excited about what’s going to come down the pike from a regulatory perspective.”

Hindley said there is a tremendous need in the market for banking institutions willing and eager to partner with blockchain-based companies. He relayed a recent phone call from someone whose bank reviewed and suspended his business account because it had the word “crypto” in the title.

Blockchain, said Hindley, is the future, and banks should no longer treat associated companies like the black sheep of the fintech industry. He believes Web3, the metaverse and “the coming blockchain revolution” will change everyone’s lives for the better.

“If a tiny little bank in Florida can play some role in that, I mean, what an awesome opportunity for our customers, our employees and our shareholders,” he said.

“We’re just so excited to be one of the first in the U.S. to roll out these kinds of products and services.”


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