How A U.K. Open Banking Fintech Diversified From Travel Transactions To SME Payments


Cast your mind back to January of this year – arguably the bleakest month of the Northern Hemisphere winter and a time to think seriously about planning spring and summer holidays.

In theory, an ideal time, you might think, to launch a payment product promising to slash the cost of card transactions for U.K. bank account holders traveling abroad. Thus, the founders of fintech startup, Currensea had every reason to be optimistic.

The rest – we know is history. In March, the World Health Organisation confirmed that the outbreak of Coronavirus was indeed a pandemic. A couple of weeks later, Britain was locked down, and while it was still possible in theory to travel overseas, in practice, airlines and ferry companies slashed their services. The travel industry went into a meltdown.

Speaking to me across a Google Hangouts link earlier this month, Currensea founders Graig Goulding and James Lynn seem remarkably unphased by the experience of launching a travel payment card at a time when very few people were moving beyond their own borders – or even beyond their own neighborhoods. That’s partly thanks to travel bouncing back to a degree when Britain’s lockdown ended but also because their underlying technology is now being used to provide an international payments service for small and medium-sized enterprises (SMEs). As such, travel is only part of the picture.

So has this been a deft pivot or part of an existing strategy? I was keen to find out.

Open Banking

Currencsea’s services were enabled by the arrival of “open banking” in the U.K. in 2018. Put simply, under new Open Banking regulations, Britain’s major banks were obliged to allow licensed third parties to access customer accounts via secure software applications. In practical terms, this opened the door to innovation. Up and coming financial technology companies could offer a range of services based on their access to bank account details.

Alumni of JP Morgan and Barclays respectively, Goulding and Lynn saw an opportunity. Like most of us, they were less than keen on paying transaction charges when using their debit cards overseas. And while there were ways to avoid the problem – such as taking out pre-paid cards – these involved the hassle of shifting cash between accounts. Their idea was to issue zero transaction charge debit cards. That in itself wasn’t a new idea, but thanks to open banking, the money would be drawn seamlessly from the user’s day-to-day bank account.

A Question of Demographics

Goulding and Lynn believed this would appeal particularly to travelers who were no longer in absolutely the first flush of youth. “The vast majority of people over 35 are wedded to their High Street banks,” says Goulding. “We saw an opportunity to serve that demographic.”

Developed using “sandbox” facilities provided by Britain’s Financial Conduct Authority, Currensea was announced in December 2019 and launched the following month. “That was incredibly exciting – we saw hundreds of people signing up and in the first quarter we were going gangbusters,” says Goulding.

The Need For A Rethink

But as the travel industry declined, a rethink was necessary. “We dealt with the panic environment by making a decision to pivot and diversify our portfolio,” says Goulding.

As Lynn recalls, inquiries from the existing customer base helped guide their next step. “We already had freelancers who were using the card and we were also getting inquiries from businesses.”

So the company pressed ahead developing a business-focused offer that launched this week. Aimed at SMEs, it provides a means to pay for goods and services using a card and – as with the travel industry offer – cutting out transaction charges. The company estimates this could save SMEs between three and four percent on international transactions.

So have they got the timing right or wrong? After a bounce over the summer months, travel is once again in the doldrums. Meanwhile, figures out this week from business insight agency, Opinium suggests that U.K. business profits fell 21 percent in September, throwing a fragile recovery into reverse. In the near distance, the economic disruption from Brexit looms.

Arguably, though, a tool that saves SMEs money could prove popular. And according to Goulding, Brexit may increase demand as British companies are likely to be setting their sights beyond Europe and will seek an cost-efficient way to make payments. To date the card has been used in 120 countries, so facilitating transactions in around 70 currencies. 5,000 users have signed up to the travel product. Depending on the pricing plan, currency is exchanged at or close to (0.5 percent) of interbank rates. As an extra incentive customers can offset their carbon through a tree planting scheme.

So what are the prospects? Travelers and businesses do have other alternatives in the shape of digital challengers, but these involve either abandoning incumbent banks or running parallel accounts. Goulding and Lynn believe their product has given them a competitive edge with target customers who want to stick with the bankers they know. In the longer term, the international variants on open banking – under the PSD2 will allow international expansion.

In the meantime, however, the headwinds created by the pandemic and the a slowdown in economic activity remain in play. It remains to be seen how the travel and SME services will bed in once things begin to return to normal but the founders have demonstrated that the underlying open banking technology allows scope to pivot and diversify as markets change.

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