As a result of aging paytech stacks, traditional financial services providers are losing market share and revenue to new digital-first companies. A recent IDC InfoBrief found that 73 per cent of FIs globally currently have paytech infrastructures that are not equipped to handle payments for 2023 and beyond. As a result, more and more payments are being processed by non-traditional FIs, whether that’s payment service providers or digital banks. By 2030, 74 per cent of consumer payments will be handled by these types of organisations.
From the assets being transacted to the companies processing them, payments are changing. Changing consumer preferences require both traditional providers and new entrants to keep up. That’s why Episode Six‘s payment solutions are powering market-leading payment propositions across the globe by giving banks, fintechs, and brands the power to create digital payment products with incredible speed and quality.
John Mitchell is CEO and co-founder of Episode Six and has decades of fintech and payments expertise. He is known for leading and growing companies and startups. Mitchell was the CEO of several payments companies, as well as the primary architect and strategist of Netspend Corporation’s early sales and distribution strategy.
What has been Episode Six’s response to financial technology innovations?
New methods of paying are being developed at the fastest rate in decades. These innovations are likely to have grown as a result of open API technology and pandemic necessity. Digital-based financial solutions are expected to grow in demand as more people live device-driven lives.
However, many businesses face payment workflows and technology design in legacy platforms that are steeped in traditional value definitions for asset classes, which create significant problems for interoperability, integration, and the creation of new products. Therefore, value-agnostic platforms are key to enabling payments flexibility. That’s why at Episode Six, we provide a highly configurable and extensible digital ledger and payments system for financial institutions, fintechs and other innovative companies of all sizes. This allows them to effortlessly design and manage products that consumers and businesses want and need. Our proprietary technology was built from scratch and is designed to be future-proofed, meaning whatever new ways there are to pay, Episode Six’s customers can provide them.
How has this changed over the past few years?
While the payments industry has been constantly changing, back-end infrastructure across financial institutions hasn’t. The payments infrastructure has largely been built based on requirements that are no longer current. Whether it’s contactless payment, QR codes or cryptocurrencies, the evolution of payments is accelerating.
Platforms need to ensure they’re future ready. The speed that new payment types are appearing means that to advance payment propositions, companies need to use platforms that are prepared to allow them to handle both current and future channels. Moreover, understanding the value of the ecosystem has never been more important. There are multiple points in payments ecosystems where payments players can fulfill potentially lucrative roles. I’d recommend being creative in forming partnerships and seek platforms which can enable this creativity.
Is there anything that has created a culture of change inside the company?
We’re a company of engineers and entrepreneurs, constantly looking to improve our products and ensure we’re providing a truly unique and differentiated proposition. We give freedom to banks, fintechs and brands to design and launch digital payments products with unmatched speed across any imaginable unit of value. We’ve architected the most adaptable and extensive payments platform with high product configurability.
Our Series B funding last year, where we raised $30million, allowed us to grow with a new intensity. We’ll continue to invest heavily in our products and people as we launch ourselves into the next phase of growth.
What fintech ideas have been implemented?
We offer a growing library of 550+ APIs and 100 plug-ins that allow businesses to introduce and customise almost any imaginable capability or product feature—simply and quickly.
With our highly-tuned platform, everything works seamlessly, removing the issues that arise from piecemealing disparate solutions together. Accounting and transaction flows are simplified yet far more capable.
Our solutions are highly performant, simple to implement and deploy—and can be used anywhere in the world. That means you can bring new products to market at speed.
What benefits have these brought?
These benefits have allowed our clients to create unique products, go to market faster, make smart enhancements, and expand globally.
Our technology has helped global FIs like HSBC create leading digital payment products. Our platform, Tritium, supports e-wallets, neobanks in Japan, and FIs and fintechs on multiple continents
Do you see any other industry challenges on the horizon?
Financial services providers have made aggressive efforts in the past year to integrate their products and be at the center of their customers’ financial lives. What this approach has done has blurred the lines between providers and what services they offer, from traditional firms offering crypto products to telco firms offering payment services. As a result, we are witnessing a land grab in financial services today. For financial institutions the more products and services they can offer and integrate, the more they can cross sell, the more they can ‘own’ the customer.
The challenge here is that time is limited. Depending on the region, there are perhaps 24 months of furious land grab ahead of us before battle lines are drawn and consumers choose their primary providers. For most financial providers, they need to have the underlying technology to offer different services, a quicker way of ensuring they have this is by partnering with companies that already offer this technology.
Can these challenges be aided by fintech?
Yes, FIs need to move fast to stake their claim before someone else does. Working with fintechs, with focus and spending on future ready paytech solutions, can help to quickly develop and integrate new capabilities to improve utility for customers and vie for a larger share of business.
Traditional FIs will continue to lose consumer payments market share, and corresponding revenue, until they have infrastructure that is able to support new ways to pay. Competition in payments is increasing. There is a land grab taking place for the hearts, minds and wallets of consumers the world over. FIs need to be able to process value in whatever form consumers demand – fiat, crypto and gaming currencies, loyalty points and value denominations that don’t exist today. That requires paytech infrastructure that’s fast to deploy, highly configurable and future ready. Data shows that FIs are investing, but also suggests that they’re focusing on maintaining a quickly diminishing position, rather than ensuring an ability to compete in the future.