The Bancorp’s managing director of Payment Solutions in Europe, Kriya Patel, talks payment trends and the future of banking, during an interview at Money20/20 Europe with Sarah Gill of PaymentEye.
Sustaining momentum in payments – Q&A with The Bancorp MD payments in Europe
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.
What have you learned running the incubator?
Catalyst is the first paytech-specific accelerator in the world. Fintech is such a big field of opportunity; incubators that are trying to do it all will inevitably struggle to tick all the boxes. These startups are potentially customers of the future so it’s important for us to understand what they want now and going forward, and make sure our company is ready to support those needs. That is critical for us from a strategic point of view.
As a business we’ve always been keen to support and facilitate disruption in payments. If you look at brands we’ve worked with – from Apple and Paypal to Amazon and Simple – innovation in the market is something we want to be associated with.
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.
Looking ahead a couple of years, will the banking space start to look radically different?
With the implementation of the new directives coming in under payments services and e-money, what we will see over the next two to three years at a European Union level is a shift that opens up more business opportunities for disruptors. Over the next three years change will probably be relatively slow, but mainly because we have a good infrastructure in Europe with Single Euro Payments Area (SEPA) and faster payments.
In the US, where there is a catch-up exercise under that infrastructure requirement, it’s going to look a lot more accelerated compared to what is happening in Europe already.
What do you make of the Brexit clouds on the horizon for Europe?
In the industry we’re in, we need free trade and open borders. Some of the frustrations that have led to the referendum are about whether the UK has enough of a say, but I think you are better off at the table and having a voice.
Europe is aware of the importance the UK has – it is a hub for fintech and a hub for a lot of investment coming into this industry. Without a shadow of a doubt, Brexit would affect fintech because businesses will have to think about where they establish and operate from. I hope the UK stays in, but if it does not, those challenges are part and parcel of business.
What are you most excited about in payments right now?
We are a B2B business. For me, it’s the sheer number of opportunities in that space to provide solutions for other businesses.
The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.