Jake Tyler - CEO, Payso
Banks do many things remarkably well and manage a complex and heavily regulated bit of finance. But there is room for improvement. Financial technology companies are great complements, and sometimes alternatives, to bank services.
Banks are generalists; walk into a branch and you’ll be there alongside a panoply of others you have nothing in common with – other than perhaps geographic proximity. On the flip side, new entrants to the financial services field typically focus on serving one need or sector – they are unbundling financial services from one-stop shops. Go to BitGold or Currency Cloud for foreign exchange, or Wealthfront or WealthBar for financial advisory and management services.
Banks provide a utility that we need but are not generally known for their delightful user experience. As banking moves from branches to online and mobile, banks have never been more out of their depth in this area. For new entrants, born from the tech community, building a great digital user experience is their strongest asset.
New entrants can materially undercut on cost and performance in some, but certainly not all, areas.
Banks’ cost structure is bloated by an expensive branch network and dated IT infrastructure. New entrants are able to build similar products in some (though not all) areas using today’s technology with huge performance and cost advantages.
Banking is undergoing a digital revolution, driven by new entrants from the tech world. This is good news – it will mean financial services become easier to use, cheaper and available in greater variety to more people. Given the importance of payments and finance to all businesses, this is worth paying attention to.
Kathryn Loewen - CEO, Control
Vancouver is becoming a hub for fostering innovative business models. There are businesses like Clearly, an eyewear retailer that disrupted the traditional optician-dispensed paradigm by moving away from retail locations to distributing exclusively online. Then there are businesses like Hootsuite, a range of software services for managing social media, and Unbounce, a platform that simplifies A/B testing for marketers.
These businesses all have one thing in common: they accept payments online.
For Canadian businesses, accepting payments has traditionally been an onerous process. In the past, merchants had to demonstrate a long business history and financial solvency and fill out lengthy application forms. The process all but prohibited startups and software companies from acquiring a merchant account, as they weren’t within the acceptable risk profile defined by the big banks.
Thankfully, the payments world has seen the rise of open platforms, such as Vancouver-based Payfirma and San Francisco-headquartered Stripe.
Control is one such company that builds applications on top of the likes of Stripe, PayPal and others.
When you look at the model that banks presented to businesses, the options were limited. Now, “disintermediaries” such as PayPal simplify the transfer of funds between businesses.
Banks still play an important role in the transfer of funds, and their participation is necessary as they have the scale, resources and balance sheets required to satisfy the strict regulatory requirements demanded of financial institutions. However, keep an eye on the companies that are producing apps and services on top of the banking rails. This is where you will see most innovations happening in the banking space.
Michael Gokturk - CEO, Payfirma
You don’t have to be unhappy with your bank to research financial technology (fintech) companies that can add value to your business and help it grow. One such service is credit and debit card payment processing, also known as merchant services. While some large financial institutions offer merchant services, these are not always what banks do best.
Using a fintech company often means you benefit from the best of both worlds. Fintechs collaborate with progressive banks to provide their mutual customers (you) the best possible service and technology. Day to day, the customer deals with a smaller, faster company that is quicker to innovate and provides a more personalized level of service. Fintechs tend to build richer relationships with customers by producing valuable content for their audience and putting time, effort and capital into great customer experiences – just look at the blogs of Square, Stripe and our own at Payfirma.
Fintechs are the go-between for customers who want the latest technology, rich data and analytics for their businesses and more consumer-friendly services, but backed by the security and trust associated with larger financial institutions.
Payfirma’s data proves that businesses that take payments in more than three ways stand to make more money. It’s important for any fintech company to be able to support merchants who want to sell online, in-store and through mobile. New technologies also allow payment processing – a sometimes onerous and mysterious area of running a business for most owners – to be extremely simple, by allowing users to see all the transactions in one place. Not every existing payment service can do this, but the more innovative companies are making it central to their product offering.
