Last week OpenPayd hosted the latest instalment in our Banking Unlocked webinar series. In this episode we discussed global expansion during a pandemic: is it possible, how can you do it, and how can tech and BaaS help?
We welcomed a panel consisting of Simon Taylor, Co-Founder of 11:FS; Simon Moran, CCO at TransferGo; Dawei Wang, Head of Strategy at Thunes; and OpenPayd Chief Growth Officer Sophie Guibaud. Asking the questions was Ali Paterson, Editor-in-Chief of Fintech Finance.
Simon Moran said there has always been a bigger focus on prudence in European markets, and that that’s become more important. VCs want to see you’re well-run and your plans are going to be implemented.
Dawei added that process has become more challenging, especially when you’re unable to visit and have face-to-face conversations with members of the team. But COVID has provided clarity in terms of business viability - it’s forced a focus on the quality of digital capability, the strength of your growth, and so on.
Simon Taylor underscored that B2B fintech is booming. But in Europe, he said, VCs went risk-off, because their investors become more risk-averse in turn. There was a wait-and-see approach when lots of companies needed funding. But, he said, Europe still has a structural problem: the environment is very good at seed stage, and very good at later stage, but there is a lack of support during the growth stage.
Sophie said there has been a greater focus on the distinction between real growth and artificial growth. She encouraged a focus on product during this period, underlining that products must have strong foundations.
Simon Taylor said that EU VCs want to see revenue earlier in the cycle than US VCs. He also highlighted the difference between B2B and B2C: Ii the business is B2B, VCs want to see revenue, but in B2C they want to see scale first. He said we will and should see more innovation: what’s the Grammerly or Superhuman of banking?
Simon Moran added that there is a difference between revenue and profit. Plenty of businesses are driving great revenue but without a route to profitability.
Sophie said that interaction with customers is the top priority. You have to be flexible with regard to specific customers’ local needs. Language has always been a barrier, but she says it’s less of an issue in the B2B space, where English is the given language.
Dawei said that Thunes is a cross-border payments company, so of course they have to work internationally. But he said they’ve taken this year to do lots of research into key opportunities - both clients and flows. And on the execution side, they are asking: how do we make this happen? He said that they rely on close friends of the business, many of whom are existing clients.
Simon Moran discussed TransferGo’s partnership with Visa, which he said is a step along the route to having more global strategic partners. When TransferGo launched, expansion was about going market by market and building up old-school corresponding banking networks - but that’s very difficult. The pinch-poin, he said, is always when you’re relying on legacy business models - for example, paper contracts, or needing to be physically in the room. Partnerships, Simon said, have helped TransferGo to avoid some of that.
Simon Taylor said it depends on the business and where the market pull is. Fintech is white hot in the US, and 11:FS has also seen a lot of pull coming from Asia-Pacific. But he said every business must concentrate on key questions: What do you offer? To whom is that valuable? And are you set up to deliver that from a cultural and business perspective?
Simon Taylor said that BaaS partnerships unlock great depth of experience, and the have dramatically lowered the barriers to entry. But he cautioned that you can’t copy and paste an experience from one market to another.
Sophie added that BaaS has evolved massively during the last ten years, and speed and scale are now within reach. From day one you can play in sandboxes, put together use-cases, and explore solutions with clients. OpenPayd, she said, is helping to encourage a move from standardised, one-proposition-fits-all models, to a focus on use cases and specialisation by industry.
Simon Moran said that the open secret in payments is that there hasn’t been much innovation in the last ten years. But, he said, BaaS allows for continuous deployment models, which incrementally add value.
Dawei added that there are still different risk considerations, and that larger or older businesses are still keen to own every part of the technology they use. But in payments, you’ve got to take a focused approach, and that means you can’t do anything - you have to rely on partners.
Simon Moran said that TransferGo believes in MVPs. They don’t project ten years into the future - they want to move quickly. But he said they always skew towards the V, not the M - it has to serve the purpose, and show where you can go in the future. You need the right people and a hypothesis that you’re trying to prove.
Simon Taylor encouraged businesses to look at marketing. Monzo and similar businesses have built incredible brands and are learning new ways to talk to customers. New businesses should draw attention, and then do something useful. Do things that a traditional business can’t do - you can speak in a different way, using a different tone, to a different audience.
Dawei said that it’s a very different proposition for B2B and B2C. In B2B, he said, your expansion is going to be limited by your sales teams, and that Thunes are taking a more targeted approach to potential customers and to flows.
Sophie finished by saying that expansion is all about focus. OpenPayd’ approach over the last 18 months has been about targeted reach-out to specific customer types, and they all have specific needs. She said that OpenPayd has built propositions specifically for individual customers and their industries. And, she urged: validate, validate, validate!