Completing the circle – from payments to banking

The Paypers interviews Anders la Cour, Chief Executive Officer and co-founder of Banking Circle, which recently received its Banking Licence and launched as a financial infrastructure provider

Securing a Banking Licence was always our long-term goal for Banking Circle, simply to provide us with the ability to be a bank so that we can extend the range of services we offer to our clients. We want to make sure we deliver the best possible service and we believe that requires a Banking Licence. We will now have the ability to get direct access to local clearing and offer our clients real-time clearing and settlement solutions. 

But, in essence, the underlying mission for Banking Circle hasn’t changed.  We remain committed to providing financial institutions with the financial infrastructure to deliver effective solutions to their customers.  And while we worked towards achieving the Banking Licence, we did not sit back and wait. We continued to expand both geographically and in terms of the markets in which we operate. 

We also used the intervening years to uncover the payment pain points experienced by businesses, the obstacles holding back banks and payments businesses from offering simpler, faster, more affordable and accessible solutions. This first-hand knowledge has enabled us to build a suite of solutions that improve financial inclusion and deliver true value to financial institutions and the businesses they serve. 

How will your bank and payments business clients and their customers benefit? 

It was vital to our mission of improving financial inclusion that we build dedicated new tech, rather than tailoring or tweaking existing solutions. Of course, this has taken a significant amount of time, but the resulting bespoke, flexible, scalable solutions are futureproof and more than worth the investment. 

We offer a narrow set of services, compared with other banks, and that means we can deliver tailor-made solutions. 

When we launched the business as a global transactions services provider in 2016, our aim was to provide access to faster, cheaper payments across borders. That mission has not changed, but it has grown. We are now a fully licenced bank able to deliver compliant and secure financial infrastructure at low cost. Clients include banks and payments businesses, and we process more than 2 million transactions each month, totalling more than EUR 130 billion in transactions value a year. 

Is Banking Circle now competing with existing banks?

We firmly believe that the incumbent banks are here to stay, and their services are vital to the global economy. Rather than competing with banks, we work with them, supporting them and helping them to deliver a better service to their business customers, without investing in expensive in-house solutions which take many years for a bank to build, due to their inflexible legacy infrastructures. 

As a financial utility, we seek to provide the financial infrastructure that banks need to deliver their non-core services such as small business lending and payments, leaving them to focus their internal resources on delivering the best solutions for their end customers. 

With our Banking Licence in place we can now serve banks more efficiently and effectively, and can connect directly to more countries than ever, reducing the time and cost associated with cross border payments, further increasing transparency. Moreover, we can now extend the range of services for financial services providers, as well as extend the geographies in which we can operate. This supports our ongoing mission to tackle SMEs’ financial exclusion that exists globally, by unlocking access to banking services regardless of borders. 

What does the future hold for the financial services industry, in your opinion? 

There has been much speculation over recent years that banks are on the way out to be replaced by fintech disruptors. We do not believe that is an accurate picture of the future of banking. Traditional incumbent banks hold the invaluable and unique benefit of history: customer loyalty, trusted values, deep customer knowledge and understanding, all of which will be passed on to their next generation of services. And they have both the appetite and the resources to reinvent themselves to meet new market needs, enabling them to compete very effectively with the current cohort of disruptors. 

Banks have something the disruptors can’t emulate: solid foundations for longevity. That is, if they also embrace the future and shake off the shackles of legacy. Reinvented for the new economy, with a modern, progressive outlook, the incumbent banks are in the strongest position to deliver solutions that meet the current and future banking needs of consumers and businesses.

Payments businesses and banks each provide a specific set of solutions, and working together with a licensed infrastructure provider such as Banking Circle allows them to deliver the best service possible without investing in costly in house tech and a team to maintain and update the tech and the solutions it provides. Banking Circle handles the non-core ‘pipes and plumbing’ for these financial institutions and allows them to focus on their all-important customer relationships and core offerings. The result is that each player delivers the best possible version of their offering so that customers across the board receive the highest quality service and the best solution possible.

What role does Banking Circle play within this vision of the future? 

We have made a name for Banking Circle over the last five years as a ground-breaking financial utility. However, the business has since evolved to form a new category of Bank and securing our Banking Licence has significantly elevated the role of Banking Circle in the digital financial economy. 

Now a financial infrastructure provider for payments businesses and banks, we are giving financial institutions access to real proposition benefits to attract and retain their customers. We enable them to deliver faster payments regardless of borders and regardless of the size of the business or the transaction; we also give them the opportunity to offer a more cost-effective service as we have direct relationships with local partner banks. And crucially, payments businesses and banks working with Banking Circle can seize market opportunities without having to commit to significant investment in their own internal infrastructure. 

Our ever-growing team of experts continually works to develop, update and expand our offering. Building a new tech stack in line with becoming a bank is not a one-off project, it is a continuous investment. New regulation, new territories, new services, new solutions and a growing client base – all this creates an ever-changing landscape where a static solution is not suitable. We are continuously optimising our tech – enhancing, expanding, supporting more currencies, reaching underserved clients, reducing payment times still further – with a target of payments being received within seconds.

Traditional banks do not have the capacity to move this quickly, their resources are being used to sustain existing legacy systems, leaving little space for building new systems from scratch. They also struggle to keep up with new regulation. As we have built new solutions from the ground up, we are able to adapt more quickly and have shorter lead-times from when there is a client need to when the solution is available. We have built our own engineering department and our own API cloud solution, and continue to transform more and more. 

The ecosystem banking model will continue, and we play a vital role within this. As such we will focus our resources on gaps in the market, to build new solutions to meet those needs – and to meet them effectively, at low cost and in ways which suit businesses of today. 

About Anders la Cour

About Banking Circle