Small world, big possibilities

Payments are driving never-before-seen levels of global innovation and connectivity, say Vitesse PSP’s Phillip McGriskin and Mauro Di Buono

The global insurance market stands at a pivotal point as digitisation increasingly hurtles an industry dating back 600-plus years into previously uncharted waters.

Opportunities abound as financial technology specialists use the building blocks of open banking regulations to offer their insurance company clients new solutions such as embedded finance products and ‘real-time’ parametric cover.

But underpinning all of this is the need for ease of payments – the very ethos of London-based Vitesse PSP, the global payments, liquidity and treasury management platform which is at the vanguard of the charge to change.

Vitesse was founded in 2014 by Phillip McGriskin and Paul Townsend, who had previously co-founded collection payments provider Envoy Services which, itself, was snapped up by payments giant Worldpay in 2011. Since then Vitesse has amassed some impressive statistics.

Operating in 172 countries or territories, it annually processes payments totalling £5billion. As well as counting many established blue chip insurers among several significant new contracts and now, with the support of our new backers, we have even greater ambitions.”

So, what have been the drivers for digitisation of the payments industry, including, increasingly, in insurance, and what does the future hold?

Here, McGriskin and Mauro Di Buono, who is responsible for relationship management and business development for Vitesse’s corporate division, give their views.

its clients, it provides its services – which include payroll solutions – to over 70 per cent of companies in the London market.

And, in February, the fintech announced that it had secured $26m in Series B funding to support and accelerate its growth in Europe and the US, as part of its vision of becoming the payment partner of choice for the insurance industry.

The size of that prize is vividly demonstrated by the fact that, globally, more than $4trillion of claims are settled annually.

Announcing the Series B funding, which was led by venture capital firm Prime Ventures, supported by Octopus Ventures and Hannover Digital Investors, Vitesse CEO McGriskin said: “The sector is only now adapting to more digitised ways of working, demonstrating an opportunity for Vitesse to support those looking for more integrated and efficient ways of managing liquidity while simultaneously achieving greater capital efficiency.

“In just over a year, we have increased the payments value processed by over 100 per cent and the client funds under management by 127 per cent, secured

THE PAYTECH MAGAZINE: Why has the payments industry been a catalyst for finance innovation?

MAURO DI BUONO: From a B2B perspective, I think the fact that organisations want to do more business

World of difference:

Payments have transformed how finance is done round the globe

globally, and also embracing what we have seen with remote working and a global workforce, has driven organisations to want to access different markets and jurisdictions. They didn’t really have that, historically, but it’s been accelerated in the past couple of years.

At the same time, organisations want a seamless payments experience, regardless of the country they are operating in or where their employees are based.

From a consumer perspective, we also saw a rapid acceleration of digital trends, in the last 12-to-24 months. Consumers had little choice but to embrace e-commerce as social distancing measures and lockdowns were limiting access to physical stores, so that has inevitably affected spending.

And regulation has also played a role, when you think of open banking and the adoption of the revised payment services directive (PSD2), which is making big waves in the UK and Europe, and, to some extent, also in Latin America. That has pushed the fintech and banking industry to try to deliver better and faster ways to make payments and create more financial inclusion.

PHILLIP MCGRISKIN: Digitisation is pulling the changes through, but the big underlying ground shift making them possible was when technology providers were allowed to start playing in financial services, around PSD2.

The payment services directive and the e-money regulations, I think, were the biggest enablers of all the innovation that’s come through, because they’ve enabled businesses that are not banks, to just focus on technology and payments-as-a-service, which means that they can approach the problem in an entirely different, free-thinking way.

Fintech players are the ones that have driven the change, and in my very humble opinion, it was a change in regulation that has enabled fintechs into the market.

TPM: Have the expectations of businesses and consumers around payments been permanently changed by the impact of the COVID-19 pandemic?

MDB: The demand for instantaneous results goes beyond expectations of products or services, it also applies to how customers expect their payments to be handled.

Everyone wants to make a payment and the money arrive at its destination right now, and everybody wants to receive a payment as soon as possible.

So today’s customers have expectations for, let’s say, a smooth payment process, and therefore trying to create a more frictionless payment environment for your customer has become the key to making them happy.

They don’t want things to be complicated, they don’t want to jump through hoops in order to make a payment or access different systems; they want to do that as seamlessly as possible.

On the other side, it’s also important – and Vitesse is doing this – to adopt what I call a geolocal strategy, where you’re able to offer payment solutions in different markets or countries, based on what the requirements are in specific places. I think that is what business customers are demanding, from a payment perspective.

TPM: What are the biggest hurdles facing businesses and what solutions is Vitesse using to overcome them?

MDB: Businesses are still recovering from the pandemic to a certain extent and there are other topics, such as environmental, social and governance (ESG), and sustainability. But one theme coming through increasingly, recently, is access to the right talent and people within businesses.

Digitisation is what’s pulling the changes through, but the big underlying ground shift to make these changes possible was when technology providers were allowed to start playing in financial services, around PSD2

Phillip McGriskin, Vitesse

Organisations need to start to look outside their borders to access the best resources to grow. Most of the time, those individuals sit outside the country where they operate, and they need to ensure they can smoothly hire and pay them.

So having, for example, access to a network of local domestic payment rails, such as the one Vitesse has, for paying them, is a huge advantage to enable them to grow their business globally.

And also, at the same time, ensure they pay them and any vendors in compliance within the local regulation and currency requirements.

PM: We’re a Financial Conduct Authority (FCA)-regulated business so we’ve been through the wringer in terms of making sure our processes, people, approaches, etc, are all gold standard.

By using the banks and our FCA regulation, plus our global banking network, we’re able to provide our customers with a very flexible solution, which still gives them the strength of the banks but with a much more configurable treasury platform, to enable them to make payments globally, in the most efficient way possible, and not just limited to what the banks are doing but also involving things like Visa, Mastercard and other e-wallets, to give our customers and their customers absolute choice around how the money moves. It’s about using a layer of technology and regulation, and treasury capability, on top of the big banks’ balance sheets, to make a much more effective payment service for our customers.

TPM: If we look at salaried employees and gig economy workers, as well, what is Vitesse doing to make this new payroll system work for them?

MDB: Companies are trying to innovate in that space. By innovate, I mean that employees are demanding alternative ways of getting paid, which can be real-time payments, or pay-to-card, or on-demand wage, and treasurers need to find the right tools to deliver on these expectations and meet those needs, to be competitive in the market and, above all, retain those employees.

For those employees, it means they are sure to receive their salary on time and the full amount, or they can access their salary whenever they want, which has become a more and more sought-after way of receiving pay. In that way, they can better plan their finances. They know they have flexibility around the way they get paid, and they can make more informed decisions. It’s all about making the employee experience the best possible, so that firms can retain their best talent.

TPM: Open banking is the glue that has allowed technology companies to shake up the financial sector. How is Vitesse taking advantage of options like embedded finance to drive innovation, including in the insurance sector?

PM: As we see more of these embedded finance technologies come through, Vitesse is using its payment platform, and its regulation, to help develop those solutions, giving some of the more legacy verticals payments and treasury access to these new-style channels.

We’ve got incredible technologies coming out. Anansi is a business that’s working on a parametric cover – cover that pays out automatically, based on a predefined event.

Anansi’s use case is around the fact that lots of people are sending parcels all around the world, using Shopify, Parcelforce, etc, so, to make this easier, they can just click a box when they buy their postage and the price of the insurance is related to the value of the parcel, and where they are sending it to in the world.

Then the whole thing, after that, is automated. They know exactly where the parcel is, because it’s with a courier service. If the parcel is delayed, or if it gets too hot or too cold, or is broken in transit, the courier reports that as part of its standard logistics processes. And that reporting is what businesses like Anansi take back, so that they know when a claim has happened, and they can make the payment back to the customer in a seamless fashion.

Embedded finance has the flexibility to be applied to any company or industry with a transactional element to it

Mauro Di Buono, Vitesse

It’s a great experience for a customer to be able to pay, say £1, and know their parcel’s going to get there and, if it isn’t, somebody will automatically send the £15 or £20 they’ve lost back to them. We’ll see a lot more of that coming through on all sorts of different finance-related products.

MDB: Embedded finance has the flexibility to be applied to any company or industry with a transactional element to it. What’s brilliant about it is that financial and non-financial organisations can work together and offer consumers a bundled service, as a one-stop-shop for their spending.

Obviously, you can apply this to different industries. Like, let’s say I want to buy a big purchase on Amazon, but I don’t want to pay for it up front, I want to apply for a loan and have the ability to do that through the Amazon platform as well.

But say the purchase is from another country and I need to pay for it in a different currency. Having a company like Vitesse embedded into the process could deliver the seamless payment experience and do everything through one system, rather than three separate ones. That’s just an idea, but I think the possibilities are endless for embedded finance.

TPM: And, finally, continuing on the theme of innovations, what can you tell us about Vitesse’s partnership with Mastercard?

PM: Part of Vitesse’s aim is to provide our customers with as much payment choice and capability as possible. Mastercard is a truly global brand, and it’s got many billions of cards that are able to receive funds across the Mastercard network, through the Mastercard Send service, so it’s logical that our global insurance customers offer Mastercard Send to their customers as a way of being paid instantly when an insurance claim occurs.

This is one of the multiple payment choices we’ve put out to our customers, but we are working very closely with Mastercard on making sure its Mastercard Send service is optimised for the insurance industry. And by that I mean it isn’t just a case of making a payment from a pot of funds that somebody has lying around somewhere; in insurance the funds need to be in a secure environment, they need to be held in a CASS (Client Assets and Money)-type structure, in accordance with requirements of the industry from the FCA and other regulatory bodies.

Vitesse, being a FCA-regulated business, is able to hold those funds on behalf of, and with the agents of, the insurers, to make these payments out within the right regulatory framework and keep everybody in line with global rules and regulations.

Mastercard already had a Send product, and what we’ve been doing with them is really helping them to optimise it, and then get it into a platform state that’s deliverable to the insurance industry in the most efficient way possible.