In the burgeoning FinTech payments industry, Currencycloud stands out from its peers. Unlike firms such as Stripe or Adyen, who focus on domestic retail markets, the firm is honing its efforts on the cross-border business payments industry.
Since launching in 2012, the firm has managed to secure over $50 million in funding. It has also managed to onboard around 250 clients, including brokers, tier-2 banks, payment service providers and marketplace operators.
This Wednesday, Finance Magnates spoke to Mike Laven, Currencycloud’s CEO, to discuss the future of the payments industry and his firm’s plans looking forward.
Legacy systems, bureaucracy, and high fees
Based in London, Laven has a long history in the FX business. Prior to helping start Currencloud, he was, amongst other things, COO of NEX Traiana’s FX clearing network and CEO of the securities trading systems provider, Iris Financial.
“The world of business payments is very different to the world of consumer payments,” said Laven, “in the business world, if I’m paying a payroll, collecting money for customers or doing trade financing, things are much more complex, both from a processing perspective and a compliance perspective.”
To some degree, this state of affairs explains why Currencycloud exists. The firm has taken advantage of bank’s legacy systems, bureaucracies, and high fees to provide a more streamlined service to its clients.
“If you are a massive company, whether it be Google or Apple, you’re going to get a good deal from your bank,” Laven noted, “in the business we’re in, banks still control 90 percent of cross-border payments.”
This is certainly a huge proportion, but in a multi-trillion dollar industry, there’s a lot of money to go around. Currencycloud has tapped into the demand by comparatively smaller businesses, worth under $1 billion, for cheaper, more streamlined FX and cross-border payments services.
“These people overpay,” said Laven, “and the difficulty banks face is that, when they process a transaction like we do, they have to go through an FX department, a transaction services department, a client relations department and so on. That means there is a complexity to their services which means their prices have to be high and not transparent.”
The Land of the Free
Banks aren’t going to disappear any time soon, but that doesn’t mean Currencycloud is limiting its expansionary efforts. The firm raised $20 million in funding from GV, Google’s venture capital division, in July of 2017.
The bulk of that cash has gone into expanding into the US market. In February of this year, Currencycloud appointed Richard Arundel, who was previously based in London, to lead the firm’s business strategy for North America.
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“We decided to focus on the US,” said Laven, “the majority of our customers are in the UK but we’ve raised a lot of money and a lot of that has gone into US expansion.”
The firm’s efforts seem to be paying off. The majority of its customers are still in the UK, but 75 percent of its new clients are based in the US or Asia. While its fund-raising efforts so far have been successful, the firm isn’t stopping yet.
“We’ll probably raise more money at the end of this year or the beginning of next year,” said Laven. The goal of this next round of funding? To further Currencycloud’s Asian business lines.
The decision to move into the Asian market is unsurprising given the massive demand for FX and payment services in China. With almost everyone in the world doing business in China, it seems everyone needs a service akin to Currencycloud’s when working there.
“One of the major global cash flows is the money that moves in and out of China, you can’t not pay attention to it,” stated Laven, “and we can provide the payment services that facilitate that flow of cash.”
That doesn’t necessarily mean Currencycloud is going to be opening up shop in China itself. The country is not always easy to access for foreign companies, and firms often need insider help to tap into the local market.
“We’ve spent a long time trying to get the regulatory part done right,” said Laven, “but to do that we’ll still have to have partners in China.”
With offices in the UK and US and another one opening soon in Amsterdam, the firm has its eyes set on Singapore to further its Asian operations.
“It’s a timezone issue,” said Laven, “we need to start providing a much more 24 by 7 service for our customers. That means we have to have something in the Asian time zone where we can work in real time with our customers there.”
The future of the industry
It’s also in Asia that Laven sees the future development of the payments industry already playing out. With Chinese web messaging app WeChat already taking up 37 percent of the mobile payments industry and a similar trend taking place in Japan, Laven noted that a company such as Amazon could easily slip into the peer-to-peer payments industry.
“Amazon Prime already has 90 million users in the US,” said Laven, “it wouldn’t be so hard for them to take cash directly from your bank, bypassing the credit card companies, and let you exchange it with other Amazon customers.”
It’s a strange new world of finance but one that Laven seems confident his firm can play a major role in. They may not be Amazon, but Currencycloud looks set to remain a major player in the payments game in the years to come.