7 minute read
The greatest prize yet?
The world of payments has met unprecedented challenges in recent years, but the rise of digital means there is still more to be done, and more to be won, say Louis Joubert from PPS and Ruuky’s Deepankar Jha
The world is facing howling economic headwinds brought about by a toxic cocktail of Russia’s invasion of Ukraine, the continuing global COVID-19 pandemic, and sky-high fuel prices causing a cost of living crisis in many territories.
Fintech is already playing a significant role in helping us weather these storms. For example, it is a crucial weapon in the ‘soft war’ deployment of economic sanctions against Russia led by the US, UK and the EU. And the rise in use of digital payments has been key during the pandemic as many countries imposed draconian lockdowns on their citizens.
The growth of digital payment credit offerings like buy now, pay later (BNPL) is enabling people to access goods and services more affordably as inflation causes prices to soar. And the increasing enablement of cross-border digital payments using platforms developed by fintech innovators is encouraging global economic mobility and democratisation.
POTENTIAL EVERYWHERE
The global need for greater ease when it comes to paying for goods and services has never been more acute and brings with it unprecedented opportunities. That’s a view shared by Louis Joubert, chief technology officer at payments innovator PPS, and Deepankar Jha, co-founder and chief technology officer at German fintech innovator Ruuky, formerly known as pockid, which uses the PPS infrastructure and e-money licence.
PPS is a market leader among payments providers in the UK and Europe, offering a range of services including payments issuing and processing, Faster Payments, SEPA banking solutions, Direct Debit, BIN sponsorship, e-wallet provision, compliance and fraud services, supply small businesses to deposit cash instantly to their accounts at the Post Office’s 11,500 branches.
Ruuky, meanwhile, is a pioneering fintech formed in 2020 with a vision to empower the younger generation to be financially independent. It has developed a secure digital bank account with a debit Mastercard for 14 to 25-year-olds, which now also includes Apple Pay and Google Pay as part of its ambition to provide a holistic financial solution to enable young people to ‘pay, save and fulfil dreams’.
Even in the face of global economic challenges, Joubert is optimistic that opportunities abound. In fact, he believes the task will never be complete until every remaining consumer pain point has been eradicated.
“Conventional wisdom is, of course, that there’s going to be a period of consolidation now, so we’ll probably see some painful challenges in the market,” he says. “Having said that, considering the central role of payments and the opportunities around further digitisation of value streams, of user experiences, of supply chains, there’s still so much to do, there’s still so much value to be had for those firms out there that can spot inefficiencies, can spot the pain points for the end customer.
Louis Joubert, PPS
chain management, customer services and end-to-end programme design and management.
A new addition to its extensive operations is the provision of real-time payments for the UK Post Office’s banking business, which enables individuals and
“There’s so much inefficiency that can still benefit from digitisation with a strong fintech and/or payments substrata to it.“
As a co-founder of a market pioneer, Jha naturally also sees opportunities for like-minded innovators willing to put their ideas into practice.
“For brave founders, or brave innovators, it’s very easy to establish a company, right now,” he insists. “And that’s the mindset I think people have and the reason we will see a lot more fintechs trying to solve different niche problems in future.”
So how do fintechs both grab such chances and, vitally, scale their solutions? Joubert sees digital payments as ‘the fuel for fintech growth’.
“In some cases that’s the explicit aim of the organisation, PPS being a case in point, and in some cases it’s more invisible. If you think about how invisible the payment layer is with Uber or Deliveroo, for example, it’s that idea of embedded finance as part of a wider user experience.
“The user doesn’t necessarily set out to pay for something; they set out to get some takeaway delivered and it’s enabled by a lot of things. It’s enabled by a user experience, by a smartphone experience, by a delivery experience, but it’s also enabled by an embedded payment within that. And that’s a major macro trend that the whole fintech industry is benefitting from.
“Regulators love it, too, because it makes things far more transparent than the old world of cash. For end users, I think the benefits are better budgeting and more transparency over their finances. It’s impossible to budget with cash.
“This is growing so fast, in places like India, in places like Africa, South Africa, where I’m from, not to mention China. And you could even tie the whole crypto revolution to the need for this idea of digital money, and trackable money, and, in the case of crypto and decentralised finance, programmable money and programmable payments.”
RISING TO THE CHALLENGE
So, given the prize to be grasped, when does PPS’ Joubert think it’s the right time for a newly founded fintech like Ruuky to scale internationally? And what are the essential tools to allow it to do so?
As part of an organisation that already operates in several countries, he stresses the need for detailed research to address some critical questions first.
Agreeing with Joubert, Jha adds: “On top of the technical requirements, there are many other non-technical requirements that you need to support for different countries.
“The biggest factor is customer service, because, when you enter a market, people will have questions and you need to answer those questions in the language they understand. So, in the case of Ruuky, starting in Germany, and having plans to expand across several countries in Europe where they speak different languages, we need to make sure we have staff trained in those languages to support that.”
But attracting those skilled staff is a major hurdle across the fintech industry, which already suffers a considerable employee churn as companies try to outbid each other to bring in the best talent.
“For me, the thing you really need to crack is whether you have a product that, at a technical and market adoption level, is showing scalability,” he says. “As in, is it dealing with the capacity that it needs to? Is it performant to what its users expect? Will it survive, in a distributed sense, with the latencies? What do the users expect in other locations? Is it localisable? Is it personalisable? And have you considered the data residency requirements?
“If everything in your product has been built with a home market in mind, then you’ve certainly got foundational work to do before taking that further and conquering new territory.”
Joubert and Jha agree that it’s high time fintechs invested in in-house training programmes to develop their existing staff.
“Talent is a red-hot burning topic for everybody,” stresses Joubert. “My reflection on it is that there’s real scope to look at one’s own backyard first, look at the culture internally and look at how much you’re investing in your own people and what kind of a culture you’re fostering, and for that to be the attractor because that has a gravity all of its own.”
Jha wholeheartedly agrees, adding: “I know everybody wants everything fast, but that is an investment which is going to pay off in the long run. Maybe also look for some work experience students or university graduates; teach them, train them, and they’re going to stick with you, if you do it properly.”
INTEGRATE OR OWN?
Seize the moment:
The world will always need fintech innovators
Deepankar Jha, Ruuky
Any fintech with plans to scale internationally needs to have a robust infrastructure in place, which often means working with ‘as-a-service’ partners to manage issues such as regulatory compliance. From the perspective of a CTO of a B2B provider, Joubert pushes the case that fintechs should look to control and invest in their core systems and products while carefully selecting partners for the added services they require to enter different territories. “There’s an opportunity as well to create products and services that other entrants to that market could use to help them innovate at their layer of customer offering,” he adds. As the CTO of a B2C, Jha is also an advocate of keeping control of the core system, “You can build your system in a way that your partners are an integrated part of it, or have a core system that is owned and maintained by you – that’s your USP – and then you have bits and pieces that you need support from others for different countries and regulations.
“The good thing about that is that you are extracting all of it out, so in the case of going to a different country, you can just plug in with some other partner; you can try a lot of different things, without affecting your core system. This abstraction is a key factor when it comes to the architecture of your firm.”
