In this interview with Miroslav Stojmanovski, Software architect at our Banking and Finance unit, we redefine cashless, seek for opportunities beyond compliance, and discuss the challenges for FinTechs that strive to keep pace with the ever-changing world of technology.
Miroslav, you’ve recently attended the 3rd Annual Nordic Finance Forum in Stockholm which gathered experts to discuss cashless society, Open Banking and the aftermath of PSD2. What are your impressions of the conference?
The conference was very much in line with our expectations and the direction Seavus has been going towards digital trends in the payments and financial products. There were a lot of standardization, regulation and supervising entities from the EU and the region present, and not only did they confirm our stances but they also addressed all attendees to take this route towards harmonization of the EU and EAA regulated market. The general conclusion is that cashless will be present not only in the Nordics region but through Europe, with the additional mechanisms, regulations, and payment schemes and with reuse of what we currently have i.e. SEPA Direct Debit (SDD), SEPA Credit Transfer (SCT), SEPA Instant Credit Transfer (SCT Inst), existing and newly promoted settlement and clearing mechanisms, PSD2 and harmonization market initiatives etc.
You were one of the speakers at the conference that redefined cashless and its influence over the market and regulations. Tell me more about your topic, and can we reuse what we already have, i.e. QR (Quick Response), SEPA (Single Euro Payments Area) and PSD2 (Second Payment Service Directive)?
Let’s start with SEPA payments. During the presentation, I focused on the usage of SEPA Instant credit transfer (SCT Inst) as an underlying payment scheme for PSD2 implementations. The way we see payments today is through the prism of invoices that are usually being paid late. The cashless we promote is the user experience in payments, regardless if that is a B2B or B2C payment interaction.
The presentation was in line with the benchmark that future cashless needs to achieve and surpass. Contactless cards can be used for both domestic and worldwide payments, unlike current applications and cashless payments other than cards which are generally limited to domestic markets. Our goal is to present a better offering when the same cashless method, connected to a transaction account in Sweden can be accepted at point of sales, let’s say, in Spain. To execute this, we need to rely on already established schemes which are proposed or to some degree imposed by the local regulative or EU acts in more countries. And SEPA is one such example. When combined with TPPs as real-time clearing and settlement, it gives the possibility of pan-European usage of the cashless application worldwide. And this is the point where we move from banks to banking.
You’ve mentioned the impact of technologies on banking over the next few years. What are the hottest areas of discussion in the Banking and Finance industry nowadays and how is this related to the tipping point of FinTechs?
Currently, everyone is expecting PSD2 APIs to become active and promote their hidden or advanced products. The common short-term trend is that PSD2 and third-party services will bring new solutions to the fore. What we see nowadays is a path where FinTechs find their niche market in B2B, especially into products that target other PSPs or even banks. Account aggregators and multibank experience from a bank application or service are becoming the new hot topics. Additional value-added services which are envisioned, announced, and already promoted are a palette of services for customer screening and credit scorings - mainly account information services that give added values to existing Bank products and other PSPs offerings. So there is a general trend, and we have seen that at the conference, that most of the new products supply existing players on the financial market rather than creating a novel solution. Now, instead of trying to completely eclipse Banks and their services, FinTechs tend to complement them.
Seavus has been working on developing solutions for the Banking and Finance industry that follow the digital transformation and are simultaneously GDPR and PSD2 compliant. What exactly Seavus has to offer as a solution?
Seavus’ solutions are in line with the latest trends and complement the existing services to Banks and FinTechs alike. One of our frontrunners besides the PSD2 API for banks and financial institution is the Seavus PSD2 Gateway which aggregates accounts from other banks and offers account information and payment initiation services to the PSPs. We have also developed a Smart Wallet with the QR and SCT Inst integrated into the core and SDK which may be offered to possible POS providers to generate or scan such solution. Another solution is our GDPR and PSD2 compliant Smart Chatbot for financial institutions tailored according to the Berlin Group PSD2 APIs. While developing these products, we have developed expertise and gained experience in the field and thus we offer PSD2 consultancy as well. This includes revision of PSD2 solutions, stress and penetration testing, and compliance screening. Our goal is to create solutions and services that help companies deal with the regulatory tsunami.
And finally, since you have worked on developing innovative payment solutions for quite some time, what do you think that the future of Finance holds, and what will be the biggest challenge for FinTech companies that strive to keep pace with the ever-changing world of technology?
We are living and working in times of a financial (r)evolution. Regulations are changing, the market is shifting, and unprecedented challenges are emerging. One challenge is to recognize a problem, create a unique solution to it, and help others monetize by implementing it. For example, there are a lot of PSD2 initiatives across the world that aim to harmonize the APIs and payment schemes in some regions. The best guess is that, soon, this harmonization will pave the way for bigger players to enter the market of payments.
Apple, Google, Amazon, Facebook, and other giants already offer new payment instruments that double the benefits of their users. Not to mention the Chinese giants, Tencent and Alipay which have already penetrated a society that generates the biggest payment volume of the current cashless and card-less payments in the world. Alipay has already announced the cooperation between their QR solution and European banks and has its eyes set on the market. So we have a scene where big players are going to take a piece of the cake and it a challenge for FinTechs to compete with them, especially in the niche market that they target.
Another challenge is to get the right timing. We need to get the right technology, the right algorithms in the right market not sooner nor later than at the perfect moment when the market requires it. This is not as easy as it sounds since a lot of the FinTechs got closed before PSD2 opened its APIs because they’ve spent their capital developing a solution that the market was not ready to implement. I’d like to emphasize the importance of becoming a trendsetter in the financial world, and that this is something FinTechs should strive to achieve.
If interested in the topic, have a look at Miroslav’s previous interview that focused on what does PSD2 mean for the European market and the ‘Open Banking culture’ in Europe.
Seavus is a software development and consulting company with a proven track-record in providing successful enterprise-wide business solutions, covering the European and US market from several offices in the world. We serve over 3,500 customers worldwide, with the knowledge and the skills of over 900 ICT experts.
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