We sat down with Myles Stephenson, the CEO of Modulr, a new API payments platform which is redefining how banks and businesses can accelerate fast payments with more control. Myles shares his thoughts on the future of opening banking, the top trends and how his team use Catalyst to stay up-to-speed on the fast-moving fintech industry.
1. Can you tell us little about your background?
I cut my teeth in payment services at Marks & Spencer before launching CorporatePay, a successful pre-paid card solution, as part of a team that thrives to this day. US corporate WEX bought us after just three years and it wasn’t long before we decided to go back to our entrepreneurial roots in fintech. We’d become frustrated with how difficult it was to access payment and bank accounts with an efficient, technology-led approach and set out to build Modulr.
2. How is Modulr doing payments differently?
Current payment services work, but businesses that make a lot of complex payments are struggling with batch files, manual processes and laborious reconciliations. The trouble is that banks haven’t designed their corporate payment services for an always-on world. We built an easy-to-integrate, easy-to-use E-money Platform, to give businesses unprecedented control over making payments. The platform offers features like instant accounts, access to Faster Payments and powerful automation, all accessible through an API on a 24×7 basis.
3. How has the FinTech industry changed over the last 5 years?
The Fintech industry has been around for quite a while, however in many ways is still early stage, despite all the hype out there. That said, the opportunities are significant.
A few years ago, the narrative focused around how FinTechs were going to disintermediate the traditional banks. The narrative has now moved on to how banks and FinTechs will collaborate.
I’m not sure it is that simple – regulatory change across the UK and EU has opened up the market like never before, encouraging ever greater competition – and this will only increase as Open Banking and PSD2 regulations take hold. Many FinTechs are positioned well to take advantage of these new opportunities in the market.
4. What do you think are the 3 key trends impacting your industry today?
1. PSD2 and Open Banking are forcing banks to open up core banking services to FinTechs which on one hand enables FinTechs to compete on a more level playing field, and on the other hand encourages more collaboration between the old and new worlds.
2. Increased adoption of banking aleternatives will not only drive more innovation in consumer banking, but will drive more demand for simple, 24×7, real-time services from corporates through ‘consumerisation’ effects. In other words, the rising consumer expectation of user experience, still absent in corporate services, will rapidly spill over.Consumers are rapidly becoming more comfortable with using challenger banks and bank alternatives. Click To Tweet
3. New ways of operating creates new challenges and new opportunities for services. For example – peer-to-peer marketplaces need to consume payment services in an entirely different way to a traditional corporate – with the ability to collect and segregate client money, consolidate and split out fees, and pay out – all in real-time. To achieve this – full automation and speed of execution is essential.Marketplaces are creating new types of demand for banking and payment services. Click To Tweet
5. What do you think are the main challenges for FinTech startups?
Getting to sufficient scale is the key challenge for most FinTech startups. This is because the economics often don’t work without scale, especially in regulated parts of the industry, where compliance costs are high and unit costs are low.
6. How do platforms like Catalyst help you track FinTech innovation?
Catalyst is a great way for us to keep on top of other emerging technologies and digital transformation. It’s also a useful tool for identifying potential collaborative initiatives and sharing our own insight on industry trends.
7. What’s next for the future of PSD2 and opening banking?
It’s important to recognise that it will take a while for industry structures to adapt to regulatory changes – we’ll certainly be seeing evolution rather than revolution. Headline developments such as Payments Initiation Services and Account Initiation Services will carry a lot of weight but for a business like ours. Bank-equivalent access to the Payment Schemes is also a big step forward, allowing us to compete on a level playing field.