To what extent are traditional financial institutions being disrupted by fintech?
Financial services is transforming due to the twin forces of technology and regulation. Technology has had the most visible impact at the front end in terms of user experience going from physical branch to mobile and digital channels. Regulation has further accelerated technology change and customer choice, with the UK Payment Systems Regulator leading the way as competition and innovation are at the core of its raison d’être. Regulatory change means banks and incumbent financial services providers must open up their systems to fintechs to provide a better experience to their mutual customers.
Regulation is forcing the hand of some incumbents to open up their systems, but forward-thinking financial services companies had come to the realisation some time ago that partnering provided a superior solution for their end-customers. TransferMate led the industry in this regard, partnering with Sage to provide Sage International Payments back in 2011. Since then, we have partnered with the world’s leading cloud-based accounting and ERP (enterprise resource planning) systems to provide an easier way for businesses to send and receive international payments. We are now starting to partner with banks, with the goal of providing a superior end-product for our mutual business customers in terms of price, convenience and speed.
What lies ahead for Irish and UK fintech companies in the post-Brexit era?
Article 50 has been triggered and the UK will exit the European Union. The first obvious consequence for regulated financial services companies is that they must be licensed. For UK companies that wish to continue to operate in the EU, they must obtain the appropriate licence from an EU member state, should the UK lose passporting rights across the EU. For EU companies that wish to continue to operate in the UK, likewise they must obtain the appropriate licence from the UK regulatory body. A company such as TransferMate is well positioned for this challenge; from September 2017, TransferMate Global Payments have been the only EU payments institution able to operate across the EU and across all 50 states in the US in a post-Brexit world.
The second, and more difficult, challenge relating to Brexit, is uncertainty. Will a company be able to access talent? Will a company be able to operate effectively? This uncertainty creates a difficult environment for businesses that do not control their platform, their network and their infrastructure end to end. At TransferMate Global Payments, we have made certain of owning our platform end to end from day one. TransferMate was one of only three fintech providers to maintain full operations during the currency turmoil at the time of the Brexit vote on June 23, 2016.
How will this play out?
Fintech is only at the beginning of its journey. The ecosystem will evolve and grow over time, and customers will be the benefactors. Financial services companies and fintechs will partner more easily as the API (application programming interface) ecosystem matures. We will see technical and interoperability standards evolve, and new solutions will be brought to market in a fraction of the time and cost it takes today.
The ecosystem will evolve and grow over time, and customers will be the benefactors
Time and cost are at the core of the challenges most legacy banks face, to bring innovative solutions to market in short time and cut costs. The two are not mutually exclusive goals. At TransferMate we believe that our international payments solutions actually meet those dual requirements and go a step further for our partner banks; we allow them to realise new foreign exchange revenue streams previously inaccessible through our platform. And because TransferMate Global Payments solutions are white label, our partner banks don’t need to spin up a new team to implement them. We can bring the solutions to market in a matter of weeks.
TransferMate is the leading business-to-business payments platform that powers cheaper, faster and easier cross-border payments. For more information please contact gconroy@transfermate.com
