The Fintech Times sat down with Danny Shader, CEO of PayNearMe and Bill Clerico, CEO of WePay, to gain their insights and learn about their predictions for the future of the fintech industry
Tell us more about your company
Danny Shader, PayNearMe: PayNearMe is a Payment Experience Management company. Our customers are billers and iGaming operators. We handle everything around their payment experiences to increase payment acceptance and reduce operating costs by enabling deep customer engagement and improved operational efficiencies.
Bill Clerico, WePay: I co-founded WePay in 2008 with a mission to simplify payments. By 2014, the business evolved to deliver integrated, white-label payment solutions to ISVs and SaaS platforms, and in 2017, JPMorgan Chase acquired WePay. I love helping other entrepreneurs and am an angel investor and part-time partner at Y Combinator. I’m excited to have joined PayNearMe’s Board of Directors this summer and look forward to helping Danny, who has been a friend and mentor for many years, and his team take PayNearMe to its next phase of growth. Outside of work, I’m an avid pilot and love to ski.
What are the current trends you’re seeing in fintech at the moment?
BC: I see fintech taking commodity products like credit cards for college students and wrapping them with more value so that they’re not just a financial product. This innovation is disrupting the industry. The big banks have this very tough problem where they have enormous scale, but they are getting attacked by the startups that are going after niche business and building an order of magnitude better products.
DS: The biggest trend in our part of the world is the movement towards Payments 3.0 — using fintech to fundamentally transform payments.
In commerce, the classic Payments 3.0 experience is Uber – you don’t even realise you are having a payment experience because it’s seamlessly wrapped in personal transportation. In the realm of recurring bill payments (one of our non-commerce domains), this experience can include smartphone notifications that take the thinking out of payment due dates and link customers directly to their unique payment flow without having to remember account information or passwords. In just a few quick taps, a consumer can make a secure payment with their preferred payment type.
This revolution in non-commerce payments is necessitated by the high customer expectations that have been set by commerce innovators like Uber. Today’s consumers expect modern bill payment options that are as convenient and frictionless as making an Amazon purchase or paying a friend with Venmo. For instance, consumers want more mobile-friendly options for how and when they pay their bills – with 38% saying if they had the option, they would be likely or very likely to use Apple Pay or Google Pay to pay bills; 27% would want to use Venmo.
What innovation in the industry has you most excited?
BC: Personally for me, it’s the verticalisation of fintech. People are building great, highly-specialised financial solutions for smaller markets. For example, there’s a company called Mercury that is building a checking account for tech startups. There’s another company called Atob, which offers a credit card to long-haul truckers. You name it, there’s a company being built around serving the needs of niche markets in new ways. I think there will be 1000’s of these companies built over the next 10 years.
DS: Something profound is going to happen at the intersection of centralized and decentralized finance leveraging the wisdom of crowds. For example, I think the underwriting of risk could drop dramatically if the low cost of crypto/DeFi technology were used to enable the individuals aggregated at scale to properly price risk in the real world. Imagine, for instance, highly-efficient predictions markets for credit risk.
What are your predictions for the future of the payments industry?
DS: Payments 3.0 will win. Product-led companies will ultimately prevail over the financially-engineered rollups that preceded them. Basically, in a world where everything was standardised and you couldn’t innovate, the winning strategy was to achieve scale economies by consolidating businesses and using that scale to compete on price. In today’s world where innovation can impact the costs around payments, that’s a horrible trap. The rollups don’t have the resources, systems, people or cultures to compete with the innovators. They’re literally playing different games.
I think, however, these changes may take longer to happen in financial services than they did in retail because financial services are so heavily regulated. That delay will provide some near-term air cover but the end game seems clear.
BC: Eventually the upstarts will flip the market in a big way, but it will take a long time. It’s really hard to switch providers, so upstarts aren’t taking business from the incumbents; they are growing from net new business. Meanwhile, the incumbents’ growth is stagnating. When the upstarts disrupt the incumbents’ customers and begin taking share away from them, that’s when it will flip.
What is the future of fintech going to look like?
BC: I think fintech becomes the modernisation engine behind software over time. Let’s say, for example, that I want to build software to make it easier for landlords to track tenants, get paid, pay taxes, etc. Why not give the software away for free and just be the backend bank handling all the payments. It’s all part of the same experience. I think there will be something like that for every type of business out there.
Crypto could be the future of fintech, but I’m not sure. Crypto is either the web in 1999, where everyone’s just selling to and speculating on each other and when the bubble pops, it all goes away. Or it’s mobile in 2009, where the iPhone is a new platform, and the world’s about to change in a really big way. It’s sort of hard to tell which one it is.
DS: Crypto is like Razzles – a candy and a gum. Crypto is a computing platform and a financial system. Those things have never been two sides of the same coin before, and it will be interesting to see how that unfolds.
Do you have any advice for budding fintech founders?
DS: Startups only fail if they run out of money or run out of heart. Your job as CEO is to make sure neither of those two things happen. If you assemble a team of motivated people who are capable of really listening and adapting, and you point them in the general direction of a big market – and you don’t run out of money and don’t run out of heart – you will find success.
First, start with an idea that excites you to the point you can’t sleep at night. Since things are only going to get harder as your brilliant idea bumps into market realities, the momentum of that excitement helps keep you going. Along those lines, don’t be too in love with your original idea because it almost inevitably will prove to be wrong. But if you use that idea as a prop to engage with consumers, they’ll probably tell you what to do if you’re willing to listen.
BC: Pick the right people to be around you for the journey. It sounds simple, but at the end of the day, human experiences are what actually matter.