Banking as a service, Finance Everywhere, Payments, Podcasts

Why community and regional banks use Currencycloud to power their international payments offerings

  • Currencycloud has made a business out of servicing international payments offerings for other businesses.
  • Richard Arundel, co-founder and the general manager of his firm's North America business, joins us on the podcast.
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Why community and regional banks use Currencycloud to power their international payments offerings

International payments and money transfer firms are among the first of this generation’s fintech leaders. But even if they offer white-label or API solutions, companies like TransferWise are typically more strongly focused on an end customer. Currencycloud takes a different approach, helping other fintechs, community banks and other FIs to offer international payments and FX. Standard Bank, Monese, Starling Bank, Klarna and Travelex are all customers.

Currencycloud Co-founder Richard Arundel moved to the US a couple of years ago to spearhead the UK firm’s expansion there. Given the dynamics of the US market, Currencycloud takes a different tack there with clients. We talk about the nature of different geographies’ approaches to fintech and how big tech payment solutions are the biggest threat to banks and fintechs alike.

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The following excerpts were edited for clarity.

Starting with a B2B2X international payments model

We always thought that there has to be a better way to service financial customers who were ultimately serving their customers with international payments. If we could do that via technology, then we can solve a real problem. When we started in 2008, fintech as an industry was also starting up and a lot of today’s really interesting companies were born then.

We never went into this looking to build a big B2C company. Think of us like the AWS of payments. We handle the messiness and our customers can service their customers and take all the credit.

Different customer needs for international money transfer

In EMEA, our customers are primarily challenger banks, like Starling Bank and Monzo, and larger banks, like Standard Bank in South Africa and Travelex. So, exciting brands, digitally native brands and digital transformers.

Challenger banks in the US are less focused on international payments — they’re more concerned with middle America and savings. In the US, we have two clear markets. The first is what we call the mid-tier banking segment. These are banks under $12 billion, like Brookline Bank in Boston. The other category we call fintech, which is around integrated payments. So, it can be a B2B marketplace or a lending firm — anyone who wants to integrate and own the customer side of the business when it comes to payments.

Cross border payment APIs

We have an integrated offering. We’re an API company and it’s in our blood. But we also have a white label front end. With Brookline Bank, they had a goal to get to market quickly. SMBs are poorly served with cross border payments. Regional and community banks try to serve them but they are, in turn, poorly served by the correspondent banks.

With increased globalization, demand for international payments is going up but supply is coming down, as a lot of larger banks are derisking their portfolios. Brookline wanted to go to market and service the demand from their increasingly global customers. Banks are challenged with the pace of innovation. With a fully branded front end platform, they can get to market in a few weeks.

Big tech’s coming for payments

I look at firms like Amazon and think about what type of threat they will be to fintech and incumbent banks. I don’t think companies like Amazon need to take on the financial burden of a full banking service. Instead, they’ll probably consume a lot of other services they can roll out to their ecosystem. That’s probably a threat. They could take out a lot of fintechs without even thinking about it. It depends where their priorities lie. Does Amazon just want to service their ecosystem or take payments out to the broader market?

The role of the US market for Currencycloud

We started in London and came out to the US in 2014. We stuck a couple of people in a WeWork office with the naive idea that the US market would resemble the UK market. But in payments, fintech adoption in North America is probably four or five years behind.

I came out in 2017 and as a co-founder, I brought the DNA, a link between HQ and the North American office that we didn’t have before. Understanding the US market is probably easier than understanding our value proposition and what we have to offer.

The product pipeline

Globally, we’ve been focused on payables and sending payments out. The evolution of our product is to make this into a global account — payables and receivables. Receivables and how customers get paid in the US is a whole different challenge.

In 2019, look for Currencycloud’s bigger focus on a much bigger account. We’ll have a presence in Asia by the end of the year or in 2020. And thanks to the UK government, we now have presence in Amsterdam to counter Brexit. So, expanding globally and expanding platform capability.

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