IBS Journal April 2016
Original FinTech
In the first of a new series of senior FI executive interviews, Scott Thompson meets Noel Moran, CEO of Prepaid Financial Services (PFS), a UK-based e-money institution and payments technology specialist offering prepaid card solutions and banking services.
Scott Thompson: PFS often gets lumped in with the hoards of FinTechs looking to reinvent the financial services sector, even though it has been in business since 2008 (making it an OAP in startup circles).Where does the com- pany sit in the current FinTech boom? Noel Moran: Good question! PFS is in a lucky position to have a foot in two distinct camps. We are a strong technology provider and card issuer with the added benefit of being a regulated entity with solutions that can also serve other FinTechs. In fact, we’re one of the rarer examples of a FinTech that already has numerous clients and case studies supporting our sustainability, and around two million prepaid accounts in operation around the world.
I like to think of us as one of the
original FinTechs born from the rise of the virtual world of payments back in PayPal’s day, but we’ve been operating for over seven years now, long before the word FinTech was being bandied around. So if your definition of a FinTech includes the term ‘startup’ then no we’re not, but we tick all of the other boxes. It’s going to be interesting to see whether the term lives on or gets absorbed back into something more generic like financial services.
Scott Thompson: Has the Fin- Tech bubble been over-inflat- ed. Is it a case of the Emperor’s New Clothes or something of genuine substance? NM: It’s dangerous to tar everyone with the same brush and to over-generalise but indeed there are many startups out there that claim to be able to offer the world but
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have very little in the way of actual tangible assets.
Having said that, I believe that it’s
wrong to dismiss FinTechs who are very much in their embryonic phase as a case of ‘The Emperor’s New Clothes’. A problem does arise though when too many of these types of business rush to IPO before they are truly ready; this is when the shock- waves are really felt and markets start to question whether FinTech is a fad. There are two issues at stake here: one is that early stage investors are lured by public markets in confirming the share price is sustainable and the second is around raising capital. Startups need to be given a runway
for growth with a sufficient pot of cash, without having shareholders breathing down their neck for profit. Unfortunately some companies in our sector have had to go down the listing route in order to raise capital and the pressures associated with that have been a rather brutal reality check for all involved. There are real FinTech gems out there
who have been trading for a significant amount of time and who have a bonafide story to tell. But as the saying goes, for others it’s been a case of the higher they rise, the harder they fall, which is unhelpful to our industry as a whole.
Scott Thompson: What are the main issues and challenges facing FinTech ventures in the UK? NM: Following the collapse of Powa Technologies (see last issue of IBS Journal for more info on this), there will be a lot more scrutiny now on how sustainable the business models of FinTechs are, particularly for new entrants. Hyped up business plans and exaggerated claims pushed through media simply won’t cut it anymore. Venture Capitalists and
the big interviewnews
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