Using financial transactions as a driver for user engagement is a cross-functional approach that has been gaining more traction during the past decade. Consider how transactions are at the core of apps like Grab, which started as a ride-hailing service but now offers food delivery and digital payments services; or Gojek, an Indonesian motorcycle taxi service that now delivers food, parcels, groceries, and more.
To achieve this level of success, brands are changing their approach to transactions, from making them seamless to using them as a proactive channel for customer engagement – such as creating custom branded credit cards, wallets, or other branded experiences. Facilitating this vision are embedded finance organisations like Railsbank, which offer open banking APIs that provide regulated and unregulated companies access to global banking.
Frontier Enterprise recently got in touch with Nigel Verdon, CEO and co-founder of Railsbank, to talk about embedded finance, the evolution of fintech, and the impact of COVID-19 on digital banking in Asia, among others.
You’ve been with Railsbank since 2016. What have been the highlights of your time there, and what are the most significant changes you’ve seen since then, specifically when it comes to fintech?
I co-founded Railsbank in 2016 alongside Clive Mitchell. There have been many highlights, not least seeing our original vision come to fruition and on a scale that gives us traction to develop the kind of company that delivers on a number of levels, for example, for our customers, our team, and our investors.
If I had to pick a favourite highlight, up there would be the recent Web Summit conference in Lisbon. It was especially poignant as it was a ‘physical show’, which is hard to organise during these difficult times. It was there we launched our new finance category, one which we call Embedded Finance Experiences. It is this that embodies most of the vision that we had some six years ago now.
As for how fintech has changed, it has evolved as I’m sure most of its supporters would have wanted. Fintech was seen as the unruly upstart, the disruptive force which would kick down the door of a legacy financial services system that needed a change of direction. Ironically, it has been more a velvet revolution.
Far from kicking the doors down, fintech has worked alongside the legacy system and improved a whole raft of elements that held the consumer back, not least financial inclusivity. Also, it’s good to see that despite many predictions, fintech was not a flash in the pan; it did not come and go. It is still very much here and still very much setting the pace, and will do so in the future, although not arguably in its current form. And the simple reason for that is that fintech puts its customers first; the legacy financial services industry was never great at doing that and continues to struggle
How do you think the COVID-19 pandemic influenced the growth of digital banking and embedded finance in Asia? What other factors do you think are affecting this growth in the region?
One of the main issues we saw in Southeast Asia is that so many banks still rely on branch networks, which meant that during lockdown and restricted population movements, the banking network was effectively closed. But, thanks to the regulators having made changes, for example with digital identity, backed up with innovators launching digital banks and other fintech platforms, people could continue to be served.
COVID-19 also acted as a slingshot for many concepts that were beginning to be introduced before we learnt the true devastating nature of the pandemic. The troubles highlighted the need for a digital system that directly served the needs of the financial consumer. And Asia was the perfect place for many innovations that digital banking offers people.
One of the great things about Southeast Asia is that it’s an agile market at the forefront of the digital revolution. Financial consumers are already extensively plugged into and connected to digital experiences. They are always willing to adapt and welcome technological change.
And when it comes to embedded finance experiences, for the underbanked in the region, it represents an opportunity to access financial products and services in a simplistic way, giving them a chance to access well-known and trusted brands. This will allow us to continue down the path to financial democratisation.
What made you and Clive Mitchell come together and start Railsbank? What did you see in the market that was lacking?
Clive and I met at school when we were 13 and focussed on our individual careers, he as an officer in the British Navy and as a management consultant, and me in engineering and capital markets, until we came together to develop a lightbulb moment that we first articulated on a boating trip back in 2015. Open banking was then starting to become a reality, with governments and regulators around the world starting to see that the legacy financial services industry needed a major overhaul.
Yet the infrastructure was not there to help the fintechs fulfil their ideas. The opportunity existed to create a fintech for the fintechs, to create a powerful, wholly digital platform on which our customers could develop their innovations and foresight. Railsbank is not consumer-facing, we enable others – fintechs, companies, and brands – to offer embedded finance and banking-as-a-service solutions to their own customers. It was a once-in-a-lifetime opportunity and we embraced it. We collected like-minded people around us and to quote an old cliche, we have never looked back.
What sort of IT infrastructure does Railsbank use? What emerging technologies are you planning to adopt?
Railsbank is a fully cloud-native platform, giving us the flexibility to scale both with load, as well as geographically. At the same time we’ve integrated our modern platform into some of the most strictly controlled networks in the world – national payment systems. For example, we were one of the earliest non-bank participants in the UK Faster Payments network.
This mix of a modern, flexible, and scalable architecture, combined with the depth of foundations brought by direct connectivity into card schemes and banking payment systems gives our customers a unique platform for the experiences that they’re delivering.
What is the most interesting part about working as the CEO and co-founder of Railsbank?
Leading a global team which has a common goal and sense of purpose. Railsbank now numbers over 450 people spread throughout three continents and operating on a global stage means we can make a real impact on how financial services develop over the coming decades.
One of the founding ideals behind Railsbank was to improve financial inclusivity, to help those who are underbanked and unbanked. Our customers are helping to make a real difference to how people manage their money and the fact that we facilitate this, gives me a great sense of pride and satisfaction. We remain true to those founding ideals.