The European payments and fintech space has built strong momentum over the past couple of years, boosted by favorable regulation in key markets like the UK and surging investment in financial tech startups. But what needs to happen to sustain that growth, what role should the banks be playing, and what’s next for this industry? Speaking at an interview during Money 20/20 Europe as part of the Finetics™ Studio series, The Bancorp’s managing director of payment solutions in Europe, Kriya Patel, talks payment trends and the future of banking.
What is The Bancorp focusing on in Europe just now?
At the moment a lot of our drive is around B2B relationships. If you look at where we sit in the payments ecosystem, we provide the technical and regulatory infrastructure for our partners to be able to service their customers. Today 90% of our portfolio is B2B activity for payments, creating business solutions such as payroll, expense management and incentives. Anywhere a payment requirement exists I have yet to find a solution e-money has not been able to deliver at a much more accelerated rate when compared to traditional banking infrastructure.
How much has European banking and payments space changed in the past 20 years?
There’s been a considerable shift. Fintech in general is moving at a pace that it is absolutely phenomenal. I speak to so many different businesses and each seems to have a different use case for the end customer. Everything is still riding on the traditional rails of banking infrastructure but the new entrants are delivering solutions in months, not years. The traditional players need to open their eyes to that and I think a lot of them are.
How can Europe sustain momentum it has built in fintech?
Firstly, funding needs to be there and right now it is a good time to be in the fintech space because there are a lot of venture capitalists (VC) and angels out there that want to invest. The second thing is to make the most of the experience entities like ourselves and other players have in the payments space in terms of compliance and regulation.
Another advantage is the sheer numbers of incubators and accelerators where companies like us are investing to try and help startups have the best chance of success. We co-sponsor the Catalyst paytech incubator alongside MasterCard and the Emerging Payments Association in London.
How fragmented is the European payments space today?
Hugely. We operate in 20 markets and it’s radically different in different countries. The French market is especially interesting – we have a number of partners delivering products and have a considerable pipeline there, but there are local regulatory requirements you have to take into account such as reduced limits, reduced flexibility and payroll specific law. Another market that is very different is Germany, where it is quite difficult when it comes to e-money. As long as our partners have a compelling reason to try and create a solution in those markets, we will support them.
Blockchain is going to be big. We know. Just like sessions at the subject at most other conferences we’ve been to recently, the blockchain panels and speakers at this year’s Tech Open Air conference in Berlin were packed to bursting.
If you think innovation in consumer cross border payments has been big, just wait for the business-to-business (B2B) side of the equation. Speaking at Money 20/20 Europe as part of The Bancorp’s Finetics™ Studio interview series, CEO Mike Laven talks about what’s next for cross-border payments.
Balancing the need for regulation with allowing innovative ideas to flourish is tough, and nowhere more so than in finance. That’s precisely why the UK’s progressive approach to regulating fintech companies stands out in Europe and the wider world.
Fintech is talked about as one of the most exciting segments of technological disruption right now, but after the implosion of so-called UK unicorn Powa Technologies and trouble at high profile US online lenders Lending Club and Prosper there’s been something of a sobering in the space.