The Pulse of Fintech: London’s Take on International Payments
Shoosmiths’ FinTech partner, Luke Stubbs, was a speaker at the recent FinTech Week London Conference, participating in a panel discussion focused on international payments.
FinTech Week London reflects the City's role as a FinTech hub and comprises a week of events culminating in a major conference, which Shoosmiths was proud to sponsor.
The event offered a chance to connect with London's influential figures and innovators and provided a platform where traditional financial institutions and emerging FinTech players from the globe's premier financial centres, came together. It provided insights into the global FinTech landscape and fostered connections between established banks, tech giants, and disruptive newcomers.
The international payments panel was moderated by Liz Lumley, Deputy Editor at The Banker and the panellists were Luke Stubbs, Dr. Stephen Oluwatobi Director (AI) at Kora, Breno Maximiano Head of Strategy at Gnosis Pay, and Niyati Joshi, Head of Product at B4B Payments. They explored the integration of global payment initiatives, the challenges of international payments, the importance of digital identity standards, and the roles of banks and Swift in shaping the future for cross-border payments.
Watch the video from FinTech Week London here.
Here are some key findings from the session:
- Embracing ISO20022: In the discussion, Stubbs highlighted the critical shift towards ISO20022 standards. As banks and businesses navigate this transition, the focus is on engaging with these standards to reduce friction and costs while maintaining compliance. The challenge applies in both the retail / consumer and wholesale domains, each requiring tailored approaches to integration.
- Regulatory Layers: The panel underscored the necessity of constructing a harmonised regulatory framework that promotes seamless interaction between payment schemes as well as financial inclusion and reduces friction. One significant hurdle is the portability of identity and credit ratings across borders, which remains a complex issue for individuals moving internationally.
- Balancing Act: With the rise of Authorised Push Payment (APP) fraud and other financial crime, Stubbs called attention to seriousness of this situation and its importance to regulators worldwide. The global development of personal data protection rules was also flagged. There is a delicate balance to strike between stringent regulations and the protection of personal data, and innovation and expansion in international payments. This includes reconciling the ‘right to be forgotten’ with immutable technologies like blockchain, as well as trying to harmonise the diverse regulatory policies of different states.
- The Payments Race: The payments sector is experiencing swift changes due to technological progress, shifts in consumer habits, and updates in regulations. The surge in the use of contactless and mobile payments, instant payment infrastructures, and peer-to-peer (P2P) payment services are noteworthy. As the debate continues over who and what will win the payments race, the panel was optimistic about the potential of blockchain and decentralised finance (DeFi). However, the emphasis was on providing customers with the autonomy to choose their preferred payment methods.
- Innovation within Boundaries: Stubbs forecasted a near future marked by gradual progress, with innovation continuing along a steady trajectory. Current geopolitical uncertainties, upcoming elections, and the persistent threat of fraud and financial crime are expected to act as guardrails, shaping the pace and direction of innovation in the payments industry.
Partners from our Financial Services and Technology sectors also attended the event and provided thoughts on other key themes emerging in the FinTech landscape:
Regulatory framework and technology
The conference encouraged a concerted effort to create regulations that foster inclusive financial services, promote economic growth, and ensure the security and integrity of the financial system.
Howard Dawber of the Greater London Authority shared London’s ambition to be the world’s leading tech cluster. He highlighted the importance of collaboration between traditional finance and technology, with a focus on FinTech tools and artificial intelligence (AI). However, it was outlined that crucially AI needs to promote openness and reliability by adhering to ethical standards. The challenge lies in delivering AI that is understandable, transparent, and free from bias. The importance of data privacy is also paramount. These ethical dilemmas must be addressed to ensure AI is a conscientious and fair force for innovation in FinTech.
Lord Chris Holmes from the House of Lords echoed the theme of innovation, urging for the passing of the data and digital information bill (which failed to be fast-tracked through Parliament during the wash-up period) following the General Election and discussing the overall need for clarity on digital assets. He also emphasised the potential of AI and the need for the right regulatory framework.
Consumer centricity and data analytics
At the core of FinTech lies the principle of tailoring products and services to align with customer needs and preferences. Steve Gush SVP and Enterprise Head of Client Solutions at Foundever, outlined the importance of customer experience and generating insights from conversations with customers, with a panel session that followed highlighting “If you only ever follow the data, you will be too late”, emphasising the need to really understand the customer, test and learn, and use the customer to validate that.
Utilising data analytics enables a deeper understanding of customer behaviour, facilitating the provision of customised experiences that enhance trust and transparency. The challenge lies in maintaining this centricity in a digital world. While everyone is striving to achieve customer centricity, there’s no standard approach; the strategy can vary significantly between large corporations and FinTech companies. Establishing a culture that prioritises the customer, along with a strong commitment to data privacy and security, should be fundamental objectives for FinTech firms.
Scalability
Josh Dracup of Whitecap Consulting presented research findings on the successful scaling of 250 regional FinTech firms. The study revealed a positive correlation between having a female founder and increased performance, with businesses led by women achieving higher revenue growth, underscoring that “diversity drives growth”. It also found that more founders equate to more growth, with companies having four founders showing higher revenue growth (£670k vs £360k), more funding (80% vs 44.75%), and greater employee growth (5.71 vs 2.7) compared to single-founder companies. Interestingly, technology was seldom the unique selling point for these scale-ups; instead, the delivery of service was the key differentiator. The research also highlighted that business growth takes longer than anticipated, with the average scale-up studied being 14 years old.
The future of finance
The conference suggested that the FinTech industry is poised for significant transformation, with a shift towards sustainable growth and technological innovation at its core. FinTechs are moving from a phase of explosive growth to a more stable and value-driven expansion. This evolution is underpinned by advancements in technology that continue to disrupt traditional financial services, offering customer-centric solutions that prioritise user experience and accessibility.
As FinTech continues to integrate into the broader financial landscape, it will undoubtedly influence the future of finance, driving innovation, inclusivity, and efficiency in the process.
ISO 20022 is an international standard for electronic data interchange between financial institutions. It provides a framework for creating financial messages using a modelling methodology that captures financial business areas, business transactions, and associated message flows in a syntax-independent way.
Andy Thornley
Andy joined techUK in August 2022 as Head of Programme – Financial Services. His role includes leading techUK’s work in building a greater understanding of the 'technological art of the possible' in order to apply it to the reform and evolution of financial systems.
Ella Gago-Brookes
Ella joined techUK in November 2023 as a Markets Team Assistant, supporting the Justice and Emergency Services, Central Government and Financial Services Programmes.
Authors
Joe Turner
