There’s never a dull moment in the rapidly-evolving world of FinTech. From unicorns slipping unceremoniously off their rainbows, to new technologies like blockchain promising to overhaul financial services forever, it seems the only constant is change. After (another) record year of investment in financial technology start-ups, now seemed like the perfect moment to sit down with Traxpay CEO, Markus Rupprecht, and get his thoughts on some of the big questions facing FinTech today – and where Traxpay fits into the picture.
Over the past year especially, banks have become much more vocal about the need for incumbents to be collaborating with FinTechs. How different is that mindset from when Traxpay was founded in 2009?
When I founded Traxpay in 2009, the term FinTech was still very niche, and the financial technology industry as we know it now was just in its infancy. So, at that point, the mindset of banks was much more closed and it was almost impossible to envisage a collaborative future. I think the thing that has really driven forward the idea of working together is the realisation that FinTech is here to stay. Cases like PayPal, and the many FinTech successes stories that have followed, have helped banks to realise that FinTechs are viable partners who can help them to think more innovatively.
What are the key factors that have led to that change in attitude?
Market demand is a major factor. People expect technology to add convenience to every area of their lives today, and banks have had to respond to that. On top of that, banks have also been battling against the absence of revenue from loans, an area where margins are getting really thin. And finally, the threat from outside competitors is very significant. In the B2B space, competitors – not necessarily FinTechs, but large existing B2B networks – could cause a major problem for banks if they come between banks and their customers in the same way PayPal and other payment providers have in the B2C realm. At Traxpay, our focus is on helping banks to negate that threat by digitalising their business with corporate customers and enabling them to make the most of the fact they already have the biggest B2B networks.
A lot of FinTechs have come and gone in the seven years that Traxpay has been operating. What advice would you give to new FinTechs about creating a sustainable model?
Right at FinTech’s core is the idea that its practitioners can serve and enable customers in a way that didn’t exist before, so start-ups really need to make sure that’s the foundation they’re building on – do they understand what consumers want better than banks? It’s no use creating the “latest, greatest” P2P payment solution if resembles a string of predecessors that have lacked earning potential because they misjudged the market. As the old saying goes, the customer is always right – so truly understanding their needs should be the focus every step of the way.
How would you assess the current landscape of B2B payment innovations? It’s still frequently cited as an area of immense “potential” – but is it more than that now? Do businesses finally have viable options for resolving the payment problems that have plagued them for so long?
The B2B space has traditionally been less of a focal point for FinTechs, because catering to it demands a more complex degree of insight into what really makes businesses tick. It’s easier to market the appeal of paying for your Starbucks with a mobile phone – but to create great B2B solutions you need to know, for example, what challenges a Treasurer faces from day-to-day, or why cross-border payments between buyers and suppliers can be so complex. So far, a lot of the proposed solutions we’ve seen to these problems – even the recent ones – are siloed and not integrated. We’ve focused on making Traxpay a one-stop shop that offers truly integrated financing and payments solutions. So, there is still immense potential in the B2B space, but we believe we’ve also fulfilled some of that potential already by creating a viable solution to assist businesses in the here and now.
For a lot of people, “Blockchain” remains a bit of an abstract idea – how can a company like Traxpay put the technology to work in practical terms, and is it possible to put a timeframe on when shared ledger technology will really start to impact on the way people and businesses move money?
Blockchain technology is unquestionably exciting, but it’s still relatively early days and only time will tell exactly how it’s going to be put to use in the future. There’s certainly no shortage of possibilities, and we’ve been very active in exploring how they can benefit our work in B2B payments and financing. All of Traxpay’s products are set up for operation on and off the blockchain, which will ensure they’re ready for whatever the future brings.
Traxpay has received a lot of recognition in 2016, and once again took its place on the prestigious FinTech50 list. What have been the key developments in the company this year, and what are your hopes for 2017?
The key development for us has been the evolution of our payment and financing platform into something we feel is an irresistible proposition for banks. We’re now giving banks an opportunity to present their corporate customers with an integrated service that simply isn’t available anywhere else. For banks, that represents additional revenue, and an opportunity to increase customer loyalty by offering businesses the services they really want. The cooperation agreement we reached with KPMG this year has also been significant for us, and the awards we’ve picked up in 2016 are further confirmation that we’re continuing to break new ground in the B2B space. As for 2017, I believe that will be the year Traxpay becomes the leading provider for banks’ digitalisation efforts in corporate banking.