Ed Addario was appointed Currencycloud’s chief technology officer in December 2016. Since then, technological advances across payments have ramped up, and the market has begun to evolve rapidly. Bobsguide caught up with Addario recently, to get his thoughts on how the firm has changed, and what’s driving market forces.
What's changed at Currencycloud – internally – since you arrived?
The most obvious change is that we have grown, quite significantly and dramatically across all areas of the business – from the volume of money we are moving, number of customers, the rollout of products to our overall headcount. When I joined, there were around 45 people in the developer team; today, we are over 100.
On the technology side, we have moved to the founding premise of the Currencycloud: to move payments into the cloud and achieve our mission to take the complexity and opacity out of moving money across borders. The company’s first platform was developed in 2010 and was designed with large elements of cloud, but there was a degree to which we were still operating in a traditional hosted services environment. This meant that we would still have to acquire new servers whenever demand increases.
In the last three years, we have moved much closer to becoming truly cloud-native and living out this philosophy. Now, all the services we provide are underpinned by a microservices-based architecture system. This means we can scale according to demand, which is vital to maintaining the levels of hyper-growth the company is experiencing.
And what do you think is shaping the market at the moment?
The number one factor shaping the payments landscape is the sheer availability of choice. Ten to 15 years ago the choices available for banks, fintechs and other financial institutions who were looking to move money across borders in a smarter and more efficient way were in an order of magnitude fewer than they are today. There has been a tremendous explosion of companies providing solutions to real problems. This rise in optionality is injecting a healthy dose of competition into the market.
One of the other things that is really driving change in the market is the incredible rise in the expectations of consumers, who want to rely on a quick and frictionless way to transfer money. The notion that a bank account can settle for a transaction you made three of four days ago is dead and deemed no longer acceptable. This pressure has really cut through the complacency that existed in the market and is resulting in a better payment experience for the end-user.
How much will regulations impact the business in the year ahead?
We are not expecting any new regulation next year that will fundamentally change the environment. That said, it can take time for the effect of regulation to bed-in, and it is only since September this year that PSD2 has been in full effect – a year and a half after the directive was enacted. This will continue to really drive greater transparency, security and awareness of the right of each customer in 2020 and beyond.
The big question is what will be the impact of Brexit? There is a tremendous amount of interdependence when it comes to payments and regulations between the EU and UK, and since the referendum vote, there has been a cloud of uncertainty over whether this will continue. Though the UK seems set to leave the EU on January 31, I don’t think there will be an opportunity to establish with some credibility what will happen in the long-term. The one thing we can be certain of is that, at least for the foreseeable future, standing agreements and regulations will continue to apply to the UK for some time.
And what technologies?
Unleashing the full capabilities of being cloud-native will be the most significant technological development positively impacting the business. We will finish our microservices strategy this year and will have completely moved away from a monolithic architecture. This really paves the way for us to move to Kubernetes in 2020, accelerating a flatter and more agile product development. This helps unlock the full creativity of our product and development team, allowing us to roll out new features and to turn and react to the market more quickly.
We are also looking at machine learning to create very specific areas of advantage. The obvious application is to anti-money laundering (AML) and using a machine intelligence model that enhances our ability to identify suspicious payment transactions. We deal with such a large volume of transactions, that manual processes alone are not enough to crunch that level of data.
A number of banks look to be building their own systems. Should this concern fintechs?
Banks developing their own systems should be welcomed, as it is much needed. Many of the most prominent banks are stuck with unstable legacy systems which are plaguing them and their customers with problems. If they fail to upgrade their systems, challenger banks will seize this opportunity and erode their market share.
That said, I cannot conceive a bank CIO being able to not rely on third-parties to accelerate their own internal development. They see the scale and urgency with which they must innovate and realise that if they attempt to develop all the capabilities they need internally, they will likely fail.
Firms like Ripple seem primed to really shake up the payments ecosystem. How much of an impact do you think blockchain could have on the ecosystem?
Blockchain is, by its very nature, a disruptive technology. The decentralisation of trust means changing an entire string of events that exist in payments and financial services today. However, real and transformational disruption takes time and it will not come tomorrow.
The problem is there is not one blockchain, but many implementations. There is a significant amount of innovation that needs to go on before there is a clear solution and a use-case becomes so tight and so strong there is a natural coalescing.
There's been a debate recently about real-time cross border payments. Could the resources required hold up its implementation?
It is not a question of resources. We already have the technology to deliver cross-border payments in a matter of milliseconds with a high degree of transparency and trust. Furthermore, we already have real-time payments in certain areas – for example, with Faster Payments here in the UK.
What holds us back is a question of alignment and cooperation. Banks and other payment providers from different countries all need to sign up to the same set of standards and adhere to them religiously. Governments are regulators are now realising that the only way to achieve that level of alignment is to force it through with regulation. They see that the benefit for consumers is too large to ignore and are starting to act.