CANADIAN START-UP THROWS A SPANNER IN THE B2B WORKS. FI.SPAN Featured in Electronic Payments International.
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CANADIAN START-UP THROWS A SPANNER IN THE B2B WORKS
By Robin Arnfeld
What the FI.SPAN? A new Canadian connector platform is enabling banks to integrate open APIs from B2B banking and payment fintechs to serve their corporate clients. Robin Arnfield talks to Lisa Shields, CEO of the Vancouver-based firm, about its origins, plans and strategy. Lisa Shields has an impressive track record in payments, having founded Vancouver-based global mass payments service provider Hyperwallet Systems. “I ran Hyperwallet for 15 years, and it saw a lot of growth,” she says.
In June 2014, private equity firm Primus Capital became Hyperwallet’s majority shareholder, and Shields exited the firm. She founded FI.SPAN to target the business-to-business (B2B) banking and payments space in August 2016.
“The genesis of FI.SPAN was visits to Hyperwallet clients six to eight months after they had started working with us,” explains Shields.“These large corporations would ask if we could provide services such as cash management, foreign exchange or vendor payments. Clearly, they had unmet needs that their banks weren’t fulfilling, and were willing to work with third-party fintechs to meet these needs.”
“2015 was the year fintech APIs became topical,” notes Shields. “Initially, banks were told by industry publications that fintechs were the enemy as they had modern development tools which would provide a more compelling user experience. “Then banks were told they needed to join the fintechs and expose themselves to their APIs, as this was the only way to ensure ongoing market relevance.”
“My response was that banks need to open up to fintechs, as this will be good for the banks’ customers, the overall market and the economy,” Shields explains. “But, taken in isolation, it is not a good strategy for banks to expose their core services such as ‘get balance’ or ‘move money’, or their customer information to fintech APIs, as this will accelerate their revenue erosion and the erosion of their relevance to their customers.”
According to Shields, commercial banking and core transactional services in North America are worth $1.2trn in revenue to banks. “A PwC survey in 2015 found that banks estimated that just under 30% of this revenue will transition to independent service providers,” she says. “So around $360bn of bank revenue is at risk of erosion over the next few years.” When more and more businesses adopt best-of-breed services for foreign exchange, cash management or vendor payments from different providers instead of the ‘one size fits all’ offering from their bank, revenue and relevance erosion will follow. “Customers will not look to their bank first, or even at all, when they have a core transaction or service need to be met,” Shields says.
“FI.SPAN has the opposite approach to these initiatives,” says Shields. “FI.SPAN isn’t about helping banks expose their core services to third parties.
“Instead, FI.SPAN helps banks leverage APIs from independent service providers that have developed innovative, viable B2B services for banks’ enterprise clients. Fintechs connected to our platform don’t have direct access to banks’ core systems.
“Take the corporate purchasing card space. Should a bank look for the best corporate purchasing card fintech and do deep integration with its API?” Shields asks.
“The problem with that approach is that it provides the bank with a fantastic product for maybe 15% of its corporate clients, but the remainder will go elsewhere to find a corporate purchasing card solution that’s appropriate for them. “Banks need to recognize that there are going to be five or six innovative corporate purchasing cards providers in the market in 2017-2019, and find ways to leverage these companies.”
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