The news over the recent days of a major transaction systems failure has risked the commercial reputations of some of the brightest and up-and-coming Fintech banking providers.
Contis is the provider of alternative banking, card payments technology and licensing behind many of the larger players in the space. Contis was NOT a provider of services to those companies impacted, but feels it important to offer comments on the events of the last days and a Fintech World where emphasis is often placed upon being the first to claim capability rather than providing robustly architected business solutions.
As a group, Contis regularly debates the reality behind press stories released by some players in the space, choosing to remain quiet on the claims and observations of some of the more ill-informed sources on the reality of the Fintech today. But now Peter Cox (Executive Chairman and founder of Contis and industry investor), would like to record his thoughts on where he sees the industry today.
Peter Cox, Executive Chairman said:
Fintech is a major, positive disruptor of the world of finance. It needs however to balance the bright ideas and aspirations of young inventors with the realities of providing secure, trustworthy and accurate real-time processing of customers’ funds within a regulated environment.
Contis has seen many Fintech companies pay too little attention to the robustness of their solution. Instead they choose to focus upon claims that help raise funds from Seed and VC investors but do not reflect the reality of their true technical position and ability to meet the payments sector’s high demands.
Contis has spent eight years building a significant platform that meets the regulatory and international processing standards for banking and card payments. This process has taken £20m of investment, plus the utilisation of highly skilled and experienced senior industry players to ensure that its platform and regulatory framework exceeds the required industry norms. In doing so, Contis has provided an end-to-end solution which is fully integrated with banking, mobile and cards. Such a single platform provides true accountability, reducing the risks of malfunction between processing, issuing and bank integration suppliers.
Through its investment Contis has delivered a platform that today already processes some 250,000 current accounts with 12 million transactions pa and throughputs exceeding £800 million pa on behalf of its Fintech brands. Contis’ operations are PCI-DSS level 1 compliant and under constant review of Visa and the FCA.
Additionally, Contis processes many millions of Visa and closed-loop card accounts across Europe for major European retail brands and alternative banks.
My personal views are quite simple: for Fintech to be a success, the players need to “get real” when it comes to choosing their technical solution and regulatory partners. Looking for the cheapest solution and linking it to a number of independent associated corporate suppliers only serves to introduce high risk to the ultimate solution and negatively impact customers.
The events of the last days were unfortunate. They could however have been avoided by the Fintech companies involved if they had focused on the real costs of operating in this sector and selecting suppliers with proven track records and by placing accountability in the minimum number of supplier relationships under their management.
I also believe that in some cases, the pressures of moving to venture capital funding have led to investors being presented unrealistic commercial propositions. As a result, certain Fintech companies have tried to protect financial projections by choosing low-cost providers over the seasoned industry players that are able to protect credibility with robust and well architected technical solutions.
It is time the Fintech and investor community woke up to the fact that smart Fintech solutions are fantastic … but only if backed by proven, powerful and fully tested platforms to connect them to the real world of secure and time-sensitive transaction payments.
For Fintech to be successful, it’s in all our interests to get it right first time, as every failure of a Fintech to provide a secure and seamless customer experience damages the future of our important and dynamic industry and moves the sector’s users closer to the problems associated with legacy banking systems and a lack of trust.