While the ‘fintech’ we recognise today began life after the 2008 financial crisis, technology has played an important role in financial services since the 19th century. As the Payments Association explains, early fintech saw electronic fund transfers being made via telegraphs and Morse code. While this may not be advanced by today’s standards, it was an exciting leap forward in 1866 when the new transatlantic cable allowed funds to be transferred over much larger distances.
The next big step in fintech occurred in the 1960s, as finance began to digitalise and eventually went online in the 1990s. However, perhaps the biggest leap forward came when regulation was amended to enable a new type of provider to enter the financial landscape after the 2008 financial crisis. New entrants, including Banking Circle which launched in 2015, didn’t have the same legacy infrastructure slowing them down. They were free to innovate, to stir up the industry, and deliver exciting solutions to the growing list of pain points and frustrations faced by businesses and consumers transacting in an increasingly global online marketplace.
Throughout the current phase of the fintech evolution, we have seen rapid and exciting change. Financial inclusion has increased drastically, and even the smallest businesses can now trade internationally without incurring the high costs and long delays of the past.
As fintechs have evolved, so too have their requirements and the pain points they seek to resolve. Developing alongside fintechs – and integral to their evolution – Banking Circle has adapted, updated, and overhauled its offering to ensure it is always able to meet its clients’ needs and those of its clients’ underlying customers. With an ambition to provide payment solutions to empower rather than hinder global commerce, Banking Circle has been committed to innovation from day one.
In the early days, Banking Circle was a payments provider, going on to gain its banking licence in 2019. Innovative thinking and product development focused on designing from the ground up – rather than adapting existing solutions – has won Banking Circle a swathe of industry awards. A rapidly growing customer base and the accolade of handling 10% of European B2C ecommerce payments further underline the role the payments bank is playing in today’s B2B financial landscape.
Despite their success and expansion over the years, fintechs still face numerous challenges on their journey to providing the best possible financial services for businesses and consumers. Recent Banking Circle research amongst merchants in the UK, Germany, and the Netherlands found that 49% of SME merchants use online marketplaces, 46% their own website, and 39% harness social media as their sales channel.
The result is fintechs need the ability to offer payment options that work seamlessly with each of these platforms, so they can stay ahead of the competition. Recognising the global marketplace in which so many merchants now operate is critical.
What fintechs really want is the ability to offer banking services without being a bank – and without having to deal with all the regulatory and investment requirements that go along with that title. They want their customers to see them as their bank, so they need their own Bank Identifier Code (BIC) to simplify cross-border payments, and they want to provide instant settlement, direct debits, credit, and clearing.
Such big ambitions need innovative partners and innovative solutions, which Banking Circle is delivering.
Those fintechs offering access to a suite of solutions and added-value propositions in one place will be an attractive option for merchants. Keeping multiple solutions under one roof simplifies integration as well as payments themselves. The more solutions a fintech provides to its customers, the more payments those customers will send to that fintech. The challenge is, however, that no non-bank fintech can single-handedly build and maintain a broad enough suite of solutions to remain competitive.
Fintechs were built to meet a specific need and to meet it better than a traditional bank can. They were not built with the capacity to design, engineer, launch, run, and continually update and upgrade a vast array of financial services solutions.
The only way for fintechs to offer their customers a wide enough range of propositions is in partnership with expert external partners like Banking Circle. The financial ecosystem contains almost limitless broad and niche financial solutions ready and waiting for fintechs to pick and mix. Choosing the right partner with the right solutions means fintechs can offer market-leading services underpinned by fit-for-purpose tech and supported by the relevant regulatory expertise.
This article was first published in ‘The Global Overview of Payments Providers 2023’, the most recent market overview and analysis of key payment providers in the B2B and B2C commerce payment ecosystem.
With more than 15 years experience in the financial services sector, in particular focusing on FX, Laust Bertelsen brings valuable currency market knowledge to the Banking Circle proposition.
Laust ensures the Payment bank can challenge market conventions, whilst complying with international payments regulation.
Banking Circle is a fully licensed next-generation payments bank, designed to meet the global banking and payments needs of payments businesses, banks, and online marketplaces. Banking Circle solutions power the payments propositions of more than 350 regulated businesses.
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