Last week in Madrid, entrepreneurs, bankers and thought leaders came together for the second annual MoneyConf. Trustly attended to learn more about the ever-changing FinTech landscape and just days ahead of the UK referendum, there was certainly a lot to talk about, including the opening of our new London office.
Given our passion for cross-border payments, we couldn’t miss the session titled “Taking on the world with cross-border payments,” with CurrencyFair Co-Founder & CEO Brett Meyers, Kantox CEO Philippe Gelis and CurrencyCloud CEO Mike Laven, moderated by Silvia Sciorilli Borrelli of Politico. The panel covered everything from innovation and regulation to changing consumer behaviors.
FinTech: True innovation or massive marketing?
Borrelli dove right in, asking the panelists whether the buzz around FinTech is spurring real innovation in a sector that has existed for a long time, or whether it’s just a massive marketing operation.
“FinTech has been very, very hot,” said Gelis of Kantox. “I think too many companies have been focused on marketing and on building scale based on marketing, resulting in nothing really innovative. If you really want to disrupt the industry, you need a technology that is unique, defensible and that you know banks will hardly be able to replicate.”
Meyers argued that movers and shakers in the industry must be able to deliver a service much more cost effectively and use that advantage to acquire customers.
Regulation may be a pain, but it builds trust
Meyers pointed out that trust is vital for companies like his, and being regulated helps instill trust in your brand. “It’s also in many cases a leveler,” he added. “Something that gives some people an element of trust, which allows them to move away from the bank they have grown up with and try a new alternative that might be better.”
On the flip side, when building a FinTech company, coping with compliance and regulation can be a barrier to entry, said Laven. “The investment that it takes to be compliant on a global basis means that you actually need to get to some scale and that makes it very hard for a startup … You’re always going to have the regulatory and compliance burden and it’s never going to go away. How you manage efficiently and so that your customers aren’t burdened by it is the challenge.”
The behaviors, they are a-changin’
FinTechs may be stealing some customers away from banks, but those who remain with a bank have changed their behaviors too. “They know to ask for transfer prices; they negotiate much more. They don’t accept going blind on international payments and being screwed on fees and commissions,” said Gelis. “So the more educated client, in the end, is probably the client who is much less profitable for banks. We think one of the main targets of FinTech is to change behaviors and I think that we are really changing behaviors,” said Gelis.
Meyers chimed in in agreement, noting how there’s too much friction in moving to a new provider. Many companies require new customers to submit documentation and copies of bills, but most people don’t have that anymore because they pay their bills online. It’s that friction, he asserts, that prevents people from moving between services and also what protects the margins, meaning customers don’t get the best deals in the end. “When it’s as simple to sign up with a service as it should be, then I think you’re going to start seeing some even bigger changes,” Meyers said.
Lanven closed things on a positive note, thanking fellow FinTech company TransferWise for making fees so transparent. “As banks move to a new generation of technology, fees will come down. And I think all of us in the FinTech industry who have put pressure on those fees, will lower fees for even those who stay within the banks. So it’s all going to be cheaper and it’s all going to be easier, let’s just hope it’s all going to be delivered by us.”
Watch the whole session here: