The post-COVID payments perspective [an interview with GPS]

I’ve talked about Global Processing Services, GPS, a few times now. They’re the power behind payments processing at several major start-ups like Curve, Revolut and Starling Bank. Anyway, during this crisis, I decided to have a chat with them in more depth and interviewed Shaun Puckrin, Chief Product Officer. You may find it enlightening.

An interview with Shaun Puckrin, CPO, GPS

How is FinTech changing in light of COVID19?

The impact of COVID-19 has caused a dramatic shift away from cash – a shift that was already happening, but which the pandemic has accelerated. Fortunately, most fintechs are designed to be digital only, foregoing physical cash, and as such many have been well equipped to continue business as usual throughout the pandemic.

At GPS, we have been able to support our customers to launch new products to help solve issues brought about by COVID-19. For example, Starling Bank’s Connected card can be used by a trusted friend or relative to buy essential items for those self-isolating, bypassing the inconvenience of bank transfers and even the handling of cash.

As reported by Deloitte, as the economy moves to recovery mode there will be new opportunities if fintech companies are smart and bold with the leveraging of their unique assets.

Many are questioning whether the challenger banks will survive, what's your view?

It’s clear that the challenger banks have products, services and brands that resonate with customers due to the fact they have signed them up in the millions. Like many VC-backed companies before them, challenger banks have sought to understand what their customers want before then turning their attention to monetising them.  It’s probably true that some won’t make that leap, but there is so much talent, capital and knowledge in these businesses that I am sure many will go on to be extremely successful businesses.

But if you have a FinTech business built for growth and there's no growth, what can they do?

Whilst I’m sure all players would like a world where there was a growing market for everybody, low or no growth doesn’t mean there isn’t a significant opportunity out there. Whilst COVID has put many restrictions on things, it is also a time of huge change in both how and what we do as consumers and businesses. That is an opportunity for all types of business to capitalise on. Companies that can adapt quickly will prosper in such environments.

How will GPS change their business to support the challenges of clients during this time?

We’ve always prided ourselves as being a highly flexible platform that empowers our customers to build unique propositions quickly. We’ve seen this throughout the pandemic with many of our customers bringing dedicated solutions to market using our technology, whether that’s Starling Bank with their Connected cards or Soldo with their activities to support charities, not-for-profits and local governments with Soldo Care. Our platform and people have been supporting our customers so they can make the right products and services for their customers during a time of massive change.

When do you think things will change and how?

I wouldn’t care to predict exactly how things will pan out.  In the UK, the ONS has recently published figures that show retail sales are mostly recovered from a volume perspective, but that the structure of this has changed considerably.  This is a new normal that I do not think will go back to the way it was. Increased use of Card and Digital payments, more online purchases, and a shift in sectors are all part of what our customers need to think about going forward.

People talk about a K economy where digital firms thrive (big tech and co) whilst physical firms dive (airlines, hotels, etc). How do you see that playing out in FinTech?

I think this was always going to be the case, but COVID just accelerated the change.  I don’t necessarily think its Digital vs Physical; more that it is about whether businesses can adapt to their customers’ needs.  For companies with a large physical presence, this is about seamlessly building digital into their customer journeys. Fintech companies can play a role here in enabling businesses to do this.

For consumer fintech, I think the real key here is service. Many people will experience financial difficulties and irregularities through this period. People will remember who served them well through this process and so my hypothesis for financial services, both big and small, is that how you treat your customers now will have a big bearing on your success over the next five years.

If I had $1 million to invest in a FinTech firm right now, what should I think about and consider?

I still think we have only scratched the surface of what new players can do for small and medium businesses.  We’ve seen new players emerge in Accountancy and Banking, but I think we will see some of these players really emerge to become full stack tech providers for SMEs. There is a real opportunity for those who win this market not only to be successful in direct sales to SMEs, but to be a real platform for third parties to reach those businesses as well.

I still think we are in the very early stages of insurance disruption.  Firstly, people’s needs are changing rapidly, and new players will be able to capitalise on this. Secondly, the advances in big data and machine learning mean there are real opportunities to make better risk decisions than ever before.

And can you name any companies you would invest that money into?

Related to the questions above, I love what the likes of Soldo, ANNA Money and Pleo are doing in the SME space.  In the insurance space, I find the deep tech players quite interesting like Cytora or Digital Fingerprint.