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Currenxie for a better cross-border
Currenxie for a better cross-border payment platform
How these Goldman Sachs alumni turned a painful experience into a family business.
It was from a personal painful encounter with foreign exchange that ignited the first sparks in founder and chief executive officer Riccardo Capelvenere to start Currenxie, a Hong Kong-headquartered cross-border payments and business account services startup.
In an interview with Asian Banking & Finance, Riccardo recounted how his mother’s wine import business, now run by his sister, paid exorbitant sums over decades on crossborder transactions and FX when purchasing from suppliers in Italy and elsewhere. This became the sort of trigger that pushed Riccardo into a new business direction.
Banking on his experiences in quantitative and technology-driven trading, Riccardo, along with his wife Alison, founded Currenxie in 2014.
“Alison had the operational experience as a Chief Operating Officer and together we started building relationships with banking partners around the world, and acquiring payments licenses in different markets. At the same time we were developing our core technology, and by 2017 we had launched the Global Account,” Riccardo said.
And that very wine business? It became their first and longest standing client.
Laying the foundation
Currenxie is a financial services company that helps modern businesses access global commerce, by providing them with a simple solution for making and managing their payments. Essentially, it’s a modern take on the business current account, designed for today’s increasingly borderless world.
Currenxie offers its clients a single portal - the Global Account - that gives them their own virtual bank account details in every market they do business. They can receive and send fast, borderless bank payments, they have multicurrency digital wallets, and transact at very low costs.
“This is all handled on our cloud-based platform, which is an in-house core banking system for running our global network and accounts. We are fully vertically integrated, all of our technology has been developed internally,” Riccardo said.
But starting this business in 2014 wasn’t easy.
From day one, Currenxie had to painfully build its network. Riccardo said he and his wife spent the first few years flying all over the world, sometimes spending weeks away from home. Which was hard for them because they initially moved to Hong Kong back in 2013 to be closer with their family. They also drew on their experiences as former Goldman Sachs executives to create a solid business model.
“As we were one of the first fintech companies offering this kind of service in Hong Kong back in 2014, we had no benchmark. Communicating our value, and educating the market about what we had to offer, was an initial challenge. It still is, though there are other fintech companies now, and awareness is increasing. Our early clients all came through word of mouth, whereas now we have multiple channels,” Riccardo explained.
The groundwork that they did eventually paid off as they have built one of the largest virtual account networks in the B2B fintech space that spans more than 30 countries and over 18 currencies.
Recently, the company closed a Series A funding round, bagging close to US$10m ($77.89m) led by family office BF Belmont Limited Hong Kong.
Currenxie plans to use the fresh funds to build new products, acquire new licenses and authorisations as well as expand to new markets and invest in more talent. The company has raised around US$14m to date.
“We are currently seeking authorisation for our business in Ireland, which will support our European expansion. We are also looking closely at expanding in another key Asian market next year. We’re also launching some exciting new products very soon,” Riccardo added.
As of now, Riccardo isn’t worried about competition in the market, as the B2B payments market is predicted to exceed US$1.9t. He said the market can afford to support many industry players.
Currenxie’s founder and CEO, Riccardo Capelvenere
Educating the market about what we had to offer was a challenge
COUNTRY REPORT: CHINA AND CRYPTOCURRENCY What’s in store for the decentralised crypto industry with China’s antagonism?
China’s stance on cryptocurrency mining may be concerning today, but it won’t affect the global industry in the long run, Broctagon Fintech Group CEO says.
Chinese authorities seemed intent on razing the country’s cryptocurrency mining activities, recently adding the mining of bitcoin and other digital tokens to a proposed blacklist of industrial activities that they insist must be abandoned. This is supposedly part of the country’s 2026 carbon neutrality push.
This stance deals a massive blow to the global crypto mining industry, where the Red Dragon is a leading market. At times, Chinabased mining operations reportedly controlled as much as 65% of Bitcoin’s global hash rate, according to data from the University of Cambridge’s Bitcoin Electricity Consumption Index.
Even before the blacklist suggestion, Chinese officials’ crackdown on crypto mining and trading, which first began in May 2021, has already negatively impacted the local crypto industry.
“Crypto trading decreased alongside these crackdowns and the mining ban,” said Ulisse Dell’Orto, APAC Managing Director of blockchain platform Chainalysis. “Specifically, major exchanges halted derivatives trading. We hypothesise that much of this activity has migrated to [decentralised finance], but that hasn’t picked up enough that it makes up for the losses in the derivatives market yet.”
It is also negatively impacting the global cryptocurrency industry. China is one of the industry’s biggest players, with addresses estimated to be controlled by users in the country, having received over $150m worth of cryptocurrency as of January 2021, second to the United States, according to a report by Chainalysis.
Its effect on the global space, however, is not expected to broach beyond the near term, said Don Guo, co-founder and CEO of Singapore’s Broctagon Fintech Group, a multi-asset liquidity and technology solutions provider. “[For] now the crackdown might seem concerning. But the reality is that it won’t affect the global cryptocurrency pricing and industry in the long run. The utility and ownership of bitcoin have become broader over time,” he said.
Noting that the country banned ICOs or initial coin offerings in the past, Guo is not surprised by China’s antagonistic stance against cryptocurrency. For years, China has signaled that it wanted to ban bitcoin.
But whilst the global crypto market may be assured that things would soon go back to normal, in China, the crypto mining and
After China banned initial coin offerings, its antagonistic stance against cryptocurrency is no surprise
China’s mining ban is negatively impacting local and global crypto industry
Don Guo, co-founder and CEO, Broctagon Fintech Group (Photo: Broctagon.com)
trading industry has no escape— with the ban expected to push 90% of mining in the country to go offline, Guo said.
Do not expect crypto trading and mining businesses to just fade quietly; they might just set up shop elsewhere, turning their sights from the Red Dragon to the Merlion.
“In Singapore, a conducive framework for the industry has definitely attracted many renowned international blockchain and crypto firms,” noted Yushio Liu, CEO of Coinhako, a Singaporebased cryptocurrency platform.
Apart from Singapore, many countries have yet to take a regulatory stance on the crypto industry, and these will be of interest to impacted businesses, Liu said.
Liu also argued that the ban in China may not be the final nail in the coffin for cryptocurrencies in the country. There is a chance that China could pivot towards ESGfriendly cryptocurrency mining instead.
The CBDC dilemma
Around the same time that China began cracking down on global decentralised cryptocurrencies like Bitcoin, the country began the initial phases of rolling out its central bank digital currency (CBDC). CBDCs differ from cryptocurrencies, like Bitcoin, because they are designed to operate outside of the control of any one government or organisation, according to Chainalysis’ Dell’Orto.
So are they a rainbow or a dark cloud hanging on the crypto industry’s horizon? Neither, according to industry experts.
“In general, we do not see CBDCs challenging existing cryptocurrencies like Bitcoin and stablecoins. They can exist side by side and are not necessarily competitive,” Dell’Orto said.
Broctagon’s Guo agreed, saying: “CBDC and cryptocurrencies have different use cases and purposes. CBDCs are fiat currencies in digital form whilst cryptocurrencies are not legal tender in most countries.” The key features of cryptocurrencies are decentralisation and autonomy, the features that CBDCs lack, he added.
Both also have their own set of advantages: CBDCs in their tie to local currencies, and Bitcoin and other decentralised cryptocurrencies in that they are not controlled by one single entity, according to Coinhako’s Liu.
CBDCs will speed up crypto awareness
CBDCs can then be used to transact using digital versions of their country’s fiat currency, with no need to do conversions or the possibility of misunderstanding the value of their wallet. On the other hand, as decentralised cryptocurrencies are not controlled by a government or one organisation, many people can treat it as a store of value and hedge against inflation, Coinhako’s Liu said.
In fact, the roll-out of CBDCs may even bring a positive impact to the cryptocurrency industry.
“One thing that is certain— CBDCs, being digital legal tender, will speed up the awareness of digital payments. This, in turn, can raise awareness of cryptocurrencies, since the general public will likely equivocate between the two,” Guo said, noting that cryptocurrency trading is currently still small as compared to other commodities and trade-able products. “Introduction of CBDCs will push digital currency adoption into mainstream making it easier for citizens to transact.”
As for the future of CBDC roll-out, Coinhako’s Liu said that governments may opt to issue CBDCs directly to citizens with the assistance of AI over middlemen organisations like banks.
CBDCs and existing cryptocurrencies like Bitcoin and stablecoins can exist side by side
Introduction of CBDCs will push digital currency adoption into mainstream
SEGMENT REPORT: ISLAMIC BANKING Why the Islamic banking sector will be the biggest winner post-COVID
Banks adhering to Shariah laws, ethics, and values are gaining popularity amongst the Millennials and Gen Zs.
Southeast Asia’s Islamic banking sector is poised to enjoy long-term growth prospects thanks to the young population’s rising demand for Shariah-based products, coupled with government support, analysts said.
Shariah-compliant banks are expected to overtake the growth and expansion of their conventional peers in the region, according to S&P Global Ratings, particularly in the post-COVID world when demand for Shariah-compliant financial services is expected to rise.
“In our view, Islamic banks benefit from government support, a large Muslim population in many countries in Southeast Asia (SEA), and strong demand for Shariah-compliant financial products. Additional benefits include increased standardisation of contracts and potential unification of the global legal and regulatory framework for Islamic finance,” according to an S&P report by Geeta Chugh, Rujun Duan, Nikita Anand, Amit Pandey, and Ivan Tan.
Bank Islam Malaysia Berhad’s CEO En Mohd Muazzam Mohamed shared the same view, although he noted that the pace of economic recovery remains uncertain.
“We expect the economic recovery to pick up from the second quarter of 2021 onwards, following improvement in external demand, higher public and private sector activities, and the latest economic indicators signal recovery is underway,” Mohd Muazzam told Asian Banking & Finance in an exclusive interview.
Shariah-compliant banks from these markets, particularly in Malaysia, have already showcased asset quality resilience and strong capitalisation even during the pandemic. This will enable them to meet increased demand for financing as economies recover from the pandemic, said Moody’s Investors Service.
Mohd Muazzam also noted that Islamic banks have historically fared stronger than their conventional peers during dire times, most notably during the 2008 Global Financial Crisis.
Not without challenges
“Although global Islamic banking assets record higher market share at 91.4% in 2019, due to increased exposure to the real economy, the industry is expected to record declined revenue, high pressure on earnings, and lower year-on-year growth in 2020 as the focus will be on preserving asset quality at the expense of business growth,” the Bank Islam’s chief said.
Amidst new waves of infection, Islamic bank growth rates are expected to moderate with asset quality stress persisting for longer, S&P noted. It forecasted that between 2020 to end-2021, the industry will show low- to midsingle-digit growth.
Instead of focusing on the possibility of muted growth, Mohd Muazzam shared that Bank Islam is looking ahead to how COVID could be a catalyst for change for Malaysia’s Islamic banking industry.
Catalyst
Even without the pandemic, the current era is rife with drivers that will propel the Islamic banking industry to grow and improve, such as the advent of fintech, whether as a competitor or as a possible partner,
Shariahcompliant banks will overtake the growth and expansion of their conventional peers
Shariah-compliant banks, particularly in Malaysia, have showcased asset quality resilience and strong capitalisation
Mohd Muazzam said.
“The current environment provides opportunities for accelerating and unlocking the long term potential of the industry: more integrated and higher standardisation such as standardising Sukuk issuance ruling; stronger focus on the industry’s social role, such as in regards to [environment, social, and governance (ESG)],” he said.
In Malaysia, government support is also a key catalyst for growth. The country is already noted as the leader in Islamic finance in South and Southeast Asia, and the officials are reportedly taking steps that will further strengthen its position, according to Moody’s.
Just this year, as part of a push for Islamic banks to adopt valuebased intermediation—an impactbased approach underpinned by Shariah principles—the Central Bank decided to expand guidelines for Islamic banks to incorporate ESG considerations in financing. This is aimed at helping them avoid prematurely writing down or devaluing assets because of uncertainty surrounding governments’ environmental policies and identifying new growth opportunities, such as those related to the renewable energy sector.
To encourage more uptake of Shariah-compliant financial services, Bank Islam’s CEO suggested that incentives be engineered to encourage the concept of ‘circular economy’ through waqf—an Islamic financial tool or concept that thrives on the act of philanthropy.
No-touch model
Myles Bertrand, managing director APAC of cloud banking platform Mambu, told Asian Banking & Finance: “We’re seeing a lot of Islamic banks, as well as conventional banks that offer Shariah-compliant financial products, consciously moving towards digital offerings.
Nowadays, customers expect to be able to engage banks through a low-touch model, or without the need to visit a physical branch, Bertrand said, and this also holds for Islamic lenders.
“We believe that technological innovation in the Islamic banking industry is going to drive huge growth in the sector as more and more people find that they are able to access Shariah-compliant services. Islamic banks that fail to innovate digitally are going to be left behind,” Bertrand said.
He added that this trend holds important implications for those segments of the population that are still technically “unbanked” or “underbanked.”
Demographic wins
Perhaps the biggest driver of growth for Islamic banks in the future is that the population is on their side. “Prime-age populations, or people aged 25-54 years, are growing fast in Muslim-majority countries in South and Southeast Asia,” Moody’s analysts, Tengfu Li, Nitish Bhojnagarwala, Chong Jun (CJ) Wong said in a report. “Apart from cultural affinity, corresponding increases in smartphone ownership will also aid the expansion of Islamic banking, especially with the progressive rollout of electronic know-your-customer services that will facilitate remote verification of identification.”
Islamic banks that fail to innovate digitally are going to be left behind
What’s keeping young Muslims from fully embracing Islamic banking?
Islamic finance services’ appeal has grown amongst young Muslim consumers, with more than half, or 53%, saying that they would adopt Islamic Banking if it were more accessible, reported the cloud banking platform, Mambu.
One in two of the 2,000 Millennials and Gen Z Muslim consumers surveyed globally would choose Islamic banking if barriers to entry were removed, according to the “Faith and finance: the changing face of Islamic banking” report. This reflects that consumers seek to make more sustainable and socially conscious choices post-pandemic, Mambu noted.
“Younger consumers are demanding financial change, and the Islamic finance market is no exception. Our research illustrates how Islamic banking trends mirror the demand we’re seeing for ethical banking practices more broadly,” said Elliott Limb, chief customer officer at Mambu.
There are over 1.9 billion Muslims underserved globally, which presents a huge opportunity for both Islamic and conventional banks, alike, to provide compliant solutions for the modern consumer.
The Islamic finance market is rapidly growing in recent years, with total assets in the sector exceeding $2t and expected to reach $3.8t by 2023. But a lack of digital services could be a major barrier to service uptake amongst the next generation of consumers, Mambu warned.
Religious beliefs as a key factor
Mambu’s study found that 74% of young Muslims said they want banks to make investments that align with their religious beliefs. Three in four young Muslims (75%) also said they want to make investments that “do good in the world.”
Lending to tobacco companies is a big turn off, with almost two thirds (62%) indicating opposition to their bank lending to tobacco companies.
Almost seven in ten, or 69%, of the respondents, also said that they would rather their banks not lend to gambling institutions.
