This year’s International Payments Summit (four days of speeches, panel sessions and networking. You better be interested in payments!) presented a striking division. On the one side was the old guard of finance, the big retail banks, investment banks, payments processors; on the other, the world of New Finance, represented by true innovators such as Brett King of Movenbank, Giles Andrews of Zopa and Dan Wagner of MPowa. You can guess which side Currency Cloud is on.
I had the pleasure of speaking at the conference about the digitization of money and disintermediation of banks, perhaps making some attendees uncomfortable. Our lives have become increasingly digitized. Conversations have been replaced with tweets, vinyl with downloads and even our once sturdy high street is reeling from the effects of internet shopping.
The recent banking crisis in Cyprus saw the value of Bitcoin hit a record high and with it brought virtual or alternative currency to the forefront of the news agenda. Other alternatives, such as TransferWise who provide low cost peer-to-peer international transactions and Zopa, a crowd-funding start-up, are challenging the banks dominance by providing innovative solutions for businesses and consumers.
The use of cloud-based alternatives is increasingly seen as a competitive asset to an organization. Take international payments for example – 85% of all payments conducted internationally are currently done via the banks and yet over 30% of those transactions still run into “problems” that are costly to the customer. This is simply down to the archaic infrastructure that supports these transactions as much of the process is still manual.
In contrast, cloud-based platforms – whether Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS) – have the ability to connect businesses more effectively to a host of currency exchanges and optimize across and within international payment networks, significantly reducing costs and risks for the customer, as well as making the process simple, compliant, low cost and transparent. Non-bank platforms such as Currency Cloud who embrace cloud based services are shaking up business-level finance from both a cost and process standpoint.
As consumers and businesses together become progressively digitalised, the role of banks has to diversify. New Finance firms use leading edge technology to help other businesses expand into new markets, lower costs and eliminate the unnecessary complexities that traditional financial institutions, such as the banks, have supplied. Although the banks own the rails that the financial system runs on, the customer-facing services that run on top of the rails are becoming more diverse. Change is inevitable. Enjoy the ride.