The coronavirus pandemic has demonstrated the shortcomings of traditional banks against a new legion of online and digital competitors.
That is the view of Shaun Puckrin, CPO at Global Processing Services (GPS), which works with 150 FinTech firms including big names such as Revolut, Starling Bank and Curve.
GPS is an issuer processor which is certified by Mastercard and Visa to process and manage credit, debit or pre-paid card transactions globally.
The firm’s processing engine provides connectivity between various parties in the payments ecosystem, including programme managers and their cardholders, the issuing bank, the relevant card scheme such as Mastercard or Visa, and the card bureau.
Puckrin called GPS the “the epicentre of the FinTech revolution”, having recently launched offices in Singapore and Australia.
On the coronavirus lockdown, he said that the inability for incumbent banks to shut their doors was proof that online and app-based banking without a high-street location was a certain future.
“The demographic of customers of traditional banks can be assumed to be generally more comfortable handling their finances in person, rather than online,” he said.
“However, the pandemic has clearly revealed that the technology that powers digital challengers have placed them at an advantage over incumbent banks as, were the latter able to completely shut all their branches and still run smoothly, it is prudent to presume that they would.”
Puckrin said that the Payment Systems Regulator, the Financial Conduct Authority, HM Treasury and the Bank of England have formed a Joint Authority Cash Strategy (JACS) group to serve the interests of the vulnerable and safeguard access to cash for those who need it, whilst supporting digital payments.
“Ultimately what they are really focused on is a longer-term, sustainable solution,” he said.
“And they are completely right in saying that now is the time for the payments industry to innovate and demonstrate its agility, as well as to take responsibility and help people and the wider economy recover.”
Puckrin said that incumbents themselves are trialling modern FinTech, highlighting Bo, Mettle and Tyl from RBS or the recently launched currency-focused service PagoFX from Santander.
He predicts a future in which entirely new financial services will also be brought to consumers, to challenge the challenger banks.
“We are likely to see more new entrants with novel takes on financial services that may appeal to particular segments like freelancers or combined with additional services like crypto,” he said.
And even non-finanical brands may soon offer financial services, including consumer electronics, tech companies and marketplaces “enabling them to capitalise on their trusted brands to add additional revenue streams or retain value in their ecosystems”.