The credit crisis that tore apart the banking sector has had a lasting impact on the way the industry works with third parties, particularly within the payments space.
That’s according to Jeff Parker, managing director for APAC, WorldFirst, the international payments provider. “2007 and 2008 you saw a lot of banks retreating back domestically – a lot of them had global aspirations and then, of course, they had a bit of a shock.”
“There really is only HSBC and Citi Bank that are the true global banks left,” he said. “We speak to a lot of the banks now and they’re definitely a lot more prepared to working with partners and try to fill gaps in their customer base.”
However, many banks do not focus on payments capabilities – an attitude that can be detrimental to their client base said Parker.
“What we see in international payments is not a core competency for many of the banks, and a lot of them don’t offer it very well so they are almost forcing their customers to go to one of their competitors who might be able to do it better. To that end, payments can be as much a customer retention business.”
WorldFirst recently launched a new service in the US called World Account, which allows US companies to receive funds from third parties in multiple currencies and pay out to their suppliers. From January, the platform will be available via the firm’s APIs, so banks and third parties can plug in. Parker compares it to the capabilities of an international bank and interest in the platform is building, he says.
“We had a similar product that had limited success because it was our own full white label service. The problem with that is the customer then is actually our customer,” said Parker. “We manage the service – so of course the banks are more reluctant to pass the ownership of that customer onto us. With the APIs, we can provide all the underlying technology but the banks service their clients.”
For Parker, the offering is less about the type of technology used – banks are more attracted to the service. “Effectively we’ve put a layer on top of a number of banking services and knit them together into a single platform. We’re one of the few companies able to produce the network effect.”
WorldFirst has offices in China, in the US, the UK, Holland, Singapore, Japan, Hong Kong and Australia. That global presence – particularly given the firm’s access to China – is a big plus for the company’s clients. “When we talk about the network effect, our aim is to become the go-to platform for trade for SMEs and to make that work you really need to be able to work with imports and exports on both sides of the transaction. A lot of payments firms working in these Asian markets and particularly China are able to do one but not the other.”