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Jeanette Kozlowski

The Gaming Bank

10 September 2008

The concept behind the world’s first I-gaming bank is neither original nor groundbreaking -- current online banking bigwigs PayPal and Neteller have been paving that road since the late-1990's. Nevertheless, the experienced minds and the strong financial backing behind Ivobank ambitiously set out to do basically the same thing -- remotely transmit money across borders from one hand to another -- only better.

Even the company’s first steps were carefully calculated prior to its official launch this past June. The buildup included a few years of market research, United Kingdom's Financial Services Authority authorization and a three-month-long trial run. Now the bank specifically geared toward the I-gaming industry offers its full suite, which includes access to an eWallet, a savings account, an Ivobank Virtual Card and instant money transfers to customers in the United Kingdom, Ireland, Canada, Spain and more recently France, Italy and Germany.

“We are taking a very conservative approach to launching a new bank, as one would expect one would,” Martin Peterlechner, director of commercial development of Ivobank, told IGamingNews in a telephone interview.

The decision to target specifically the online gambling world came after initial research conducted with I-gaming operators showed promise. The research confirmed the proposition’s attractiveness and operators' willingness to work with Ivobank, said Mr. Peterlechner, who along with Timothy Sawyer founded Ivobank.

Both founders have a background in the banking world: Mr. Sawyer is the former chief executive of Cahoot, the Internet division of Abbey National, and Mr. Peterlechner worked as the former head of sales and marketing at Cahoot.

"We don’t want to be another Citibank or another HSBC,” Mr. Peterlechner stressed. “We recognize that there are a number niches out there where we know there are levels of dissatisfaction of the banking services offered, and we think that the gaming industry deserves something a little better."

Ivobank’s improvement upon old-guard standards features enhanced security methods like an Ivobank Virtual Card, which is a Captcha-like approach to your average credit card.

(Captcha, for reference, is an acronym for Completely Automated Public Turing Test to Tell Computers and Humans Apart -- research on which was spearheaded in 2000 by Udi Manber, formerly chief scientist of the Internet portal Yahoo.)

The online-only card, which can be used wherever MasterCard is accepted, creates a unique 16-digit number each time a purchase is made. It also allows for users to set a maximum value on each transaction to prevent both operational errors and malicious actions. If someone tries to charge a virtual cardholder more than the sanctioned amount, the transaction will be rejected.

Other highlights Ivobank believes online gaming merchants can benefit from are competitive interest rates on deposits, multi-currency settlement with localized payment options, immediate transfer settlement and indemnification of funds and low transaction fees.

Or as Mr. Peterlechner puts it simply: “It’s designed to make shopping online simpler.”

As it turns out, to make something simpler takes time, hard work -- and a good sum of money. Since the banking startup is backed by the Sampoerna family, Indonesia’s clove-cigarette billionaires, it has had no trouble affording a team of around 50 with various expertise in banking and I-gaming to fill its London office.

“We’ve got a number of staff who are out of gaming operators, software providers for the gaming market,” Mr. Peterlechner explained. “And that’s what we tried to gather -- their collective knowledge of the needs, wants and desires of the gaming market coupled with our knowledge of understanding with online banking and banking per se.”

Two months since the launch, the focus is now on a “gradual increase.” Mr. Peterlechner said the bank now has several thousand users with the goal of reaching a million customers within the next five years. Moreover, he states that Ivobank has been working with a number of online gambling merchants to integrate its payment solution on I-gaming Web sites. Those merchants will be going live very soon and will be unveiled in the near future, he added.

As Ivobank buzz heightens, one industry analyst is not completely convinced that it will have any significance in the I-gaming world.

“I am no expert in payment processing but this, on the face of it, it looks just like another MasterCard to me,” Andrew P. Lee, a leisure analyst with Dresdner Kleinwort, wrote to IGamingNews via e-mail. “I would put decent money on this failing.”

Another believes Ivobank has positioned itself to take on the big boys of online banking.

“These guys are the most serious players to enter this space since Neteller,” Simon Holliday, a partner with Global Betting and Gaming Consultants, told IGN over the phone. “And, you know, they are not Neteller, but they probably have the potential to be the most serious guys in this space. They’ve got a concept that really is workable in the future and goes far beyond online gaming.”

The Gaming Bank is republished from
Jeanette Kozlowski
Jeanette Kozlowski