P20 Global payments conference 2021
During the P20 global payments conference 2021 Alastair discussed investing in early-stage payments firms and fintechs with Investor and Co-Head of Financial Services Group, CVC, Peter Rutland.
“You have got to start thinking about the broader ecosystem and what is the regulatory environment that you can scale from. I get concerned about technology for technologies sake that’s not solving a business application. We as payments investors have been involved in tokenization and securing a transaction for many years, so I’m not sure there’s a huge gap in the technology because acceptance is pretty global now, there may be more efficient ways of doing it but that’s almost a utility play already.” – Alastair Lukies
“Fintech businesses in the UK start getting into the Bank of England PR remit which is when they become regulated banks. In many cases that’s when there can be a little bit of a shock to the system because these fintech companies have been doing a good job at managing the FCA regulator then find out that the Bank of England doesn’t give the same sort of flexibility. Everything has to be the platinum standard and therefore sometimes that’s one of the examples of why fintech companies need to be aware that they’re not only building great technology and operational capabilities in their businesses as they’re growing, but they also need to be well aware of the sort of regulatory insights that they need to be building in their companies as they get to a certain scale, so they don’t come a cropper later on in their development.” – Peter Rutland, Co-Head of Financial Services Group, CVC
“There are certain areas of the payments market (for example international foreign exchange) where there’s still big margins in certain parts of the market and therefore, new innovation can not only benefit from high margins as a take rate level and still make a very good improvement in the end customer experience in terms of the margins that they’re having to pay to get access to the service.
“But most of the payments market is already pretty efficient, so brining in block chain technologies and crypto currencies have to be quite careful whether they are really solving a problem that’s there or are they trying to solve an issue you wish was there. So, this may be how you can avoid spending investment dollars in areas that may be less valuable for customers then some of the ones which sound very exciting but actually aren’t going to make any money.” Peter Rutland, Co-Head of Financial Services Group, CVC
For more insights on the investment in early-stage payment firms and fintechs, check out the P20 conference website here.