Haggerston Times thinks of Arifa Khan as the voice of Fintech in London, and the Fintech Storm, which she organises, as the best place in London to find unbiased, open and high level discussion of what FinTech means and how it is currently trending.
Arifa has an open and daring personality which always makes her opening remarks enjoyable and worth listening to; even when she is introducing a panel of big-hitters such as of Praful Morar of Safecharge, a global provider of payments services, risk management and IT solutions, Stuart Butler of Skrill, a payments processor most active in Africa and South America, and Celine Lazorthes, Founder and CEO of Leetchigroup and MangoPay, online money collection and crowdsourcing platforms respectively, Arifa invariably finds ways of challenging preconceived ideas about FinTech, and unveils new topics for discussion during the lively panel debates.
Fintech is not always so easy a subject to get excited about as say, fashion tech, wearables, dating apps or new trends in social media, but it really should be, because culturally it is perhaps more significant than any of the above, particularly in emerging countries, as we shall see, whilst providing support to the investment community in the developed world, as we shall also see, and, let’s not forget Fintech involves dealing with vast sums of money, and money still talks, however disruptive your platform is.
Last night’s event was all about mobile or web based payments processing applications. When Metro Bank opened their first branch in 2010 they had just become the first institution to be granted a banking licence in the UK in over 150 years; since the nineteenth century, in fact.
Arifa was clearly shocked to have discovered this and when you think about it in the context of today’s market, where, as she pointed out, you can, in theory at least, obtain a banking licence in less than 48 hours…using an iPhone(!), it seems incredible that such a hegemony could exist, unchallenged and without being disrupted, for so long.
It certainly hasn’t been the case in other countries and it isn’t any longer over here, as Arifa revealed that 29 firms are applied for a UK banking licence in 2014. All we can do is make up for lost time, it seems, although Natwest, Barclays, HSBC et al may have something to say about that.
Or perhaps not? Because now we have mobile technology which can support peer to peer payments, what do we need banks for? As Arifa explained, banks today form only part of a broader eco-system which a consumer builds up around themselves. The UK is becoming Bitcoin’s new best friend, even as other crypto currencies gain traction. The mobile payments industry will be worth $58bn by 2017. Retail will continue to reshape and redesign. One scenario that may play out in future is that the retail banks may be left with the traditional staple of only current accounts, while disrupters cherry pick the most profitable pieces of the value chain and deliver an enhanced user experience, and value, to nibble away at banks
Perhaps this was the overriding theme of the evening: is it increasingly becoming the case, just as Charles Darwin predicted, that “it is not the strongest, nor the most intelligent that survives. It is the one that is the most adaptable to change”? Let’s take a look at the “threats”.
Praful Morar, despite the heckling delivered by one backmarker frustrated at the lack of a microphone (not Praful’s fault!), gave an entertaining presentation. Safecharge is an LSE listed Company, which can accept payments in 130 currencies and pay out in 16. The company settles retail, gaming, and FX binary options transactions amongst others, enabling the user to connect with the merchant faster, whilst optimising the merchant’s services.
The abandonment rate associated with online transactions is estimated at $4 trillion in missed sales, which is an astonishing, if disputed, figure; Safecharge believe that a significant volume of transactions are abandoned because consumers are often buying at times when they are distracted, whilst watching TV, or catching up with family and friends. The merchant needs to be prepared for buyers who are multitasking. The company provides a range of anti-abandonment solutions, superimposing their own systems on top of the merchant’s pages and making adjustments to suit the user, such as flashing warning signals or alerting the consumer when the payment is being unaccountably delayed.
Safecharge’s platform has many other useful features; it can recommend the most suitable payment option according to the user’s preferences, or a more suitable payment point based on the transaction type, instigate dialogues with customers to help reassure them when a transaction is taking longer than expected, and troubleshoot problems and payment issues. Praful describes it as an “absolutely solid” solution. Testimonials, plus an established network of 16 major financial services firms, powerfully support his claim.
Skrill is, or was, New York slang for money, and it is now the third largest e-wallet in the world, after Paypal and Alibaba. The company formerly known as Moneybookers was first acquired by Investcorp, a Bahranian private equity company in 2007 for 107m, before being sold to CVC capital partners, followed by an acquisition by Optimal Payments in March 2015 at a valuation of a little over £1.16bn. Skrill may soon also become a FTSE 250 company. The product is most popular in Latin America and Africa, where 80% of the population own a mobile phone, but just 11% have opened a bank account.
The model is expanding rapidly, with 36 million account holders and revenues of over €220 million in 2013. Where Western Union, for example, will charge 3 types of commission, one for the processing and one for the agent at the sender and receivers destinations, Skrill takes just the processing fee. 5% as compared to 15%. Butler provided some insight into the state of banking in Africa, which is not so much ripe for disruption as an attempt to build order from chaos.
In Uganda, for example over 800,000 monthly payrolls are paid via mobile; in Kenya, there are just 4,000 ATM machines, but more than 85,000 MPESA agents. It is clear that mobile is king in Africa, and as access to Wi-Fi becomes cheaper, Butler explained, providers are desperately looking for ways to encourage customers to burn more data, as this represents one of the few remaining lucrative revenue streams. Butler, and Skrill, have taken themselves out of their comfort zones to acquire knowledge that makes them market leaders in a space that desperately needed an injection of new technology.
Mangopay is a payment API for online marketplaces and the sharing economy, spun out of Leetchi.com, a leading online money collection site with over 3m clients in over 150 countries, employing 30 people.
“When I started out”, I didn’t know I was building a bank”, says founder and CEO Céline Lazorthes, who, along with her business partner, became one of the youngest ever entrepreneurs to win a banking licence.
Mangopay is unique in that it allows you to design your own payment platform, independently and with minimal fuss. The team provide support but often it’s not necessary, says Lazorthes, and there is no need to sign contracts with banks, all of the legals are covered by Leetchi.com. The product is FCA approved and is currently working with over 10 banks. Customers can manage payments, create wallets, usually in less than 48 hours. “It works and it’s cheap”, is Lazorthes straightforward marketing message. There are 50 platforms live already in the UK; the team are hoping that at least one of them becomes the next Airbnb. Not at all unlikely in the world of Fintech.
The panel debate ranged from questions about code, to what how many players can realistically survive in such a crowded and fragmented a marketplace as online payments, to scalability (there’s no point building a product for a one time deal, to the mechanics of onboarding a merchant in under 48 hours.
It’s possible, of course, but it wouldn’t have been so easy had it not been for FinTech evangelists like Arifa Khan. London owes Fintech Storm a debt of gratitude for helping to make the world’s leading FinTech destination. We wonder how it will choose to pay!
Fintech Storm is held every month in the heart of London and hosts the most insightful speakers on all things innovative and disruptive in banking and financial services including talks, panels and by invite only CEO roundtables. For more details check out the facebook page: