Fintech – and Regtech – is an arena that is suffering (or benefitting) from disruption, perhaps more than most. We spoke to a new kid on the block, Railsbank, that has a different approach and one that is intriguing. It is about the plumbing.
Disruptive.Asia: When (and more importantly why) was Railsbank established?
Railsbank was founded in 2016 by serial entrepreneurs and fintech veterans Nigel Verdon (currently CEO) and Clive Mitchell (currently COO).
It came out of the experience of building the fintech 1.0 wave (Verdon was in the vanguard with the founding of fintech Currency Cloud) and the cost that the early fintech companies had to bear through building their own “stack” (the back-end transactional plumbing that makes the business possible).
What was the gap in the market and was timing critical?
The pair spotted a gap in the market for a business which could not only provide aspiring fintechs, but indeed any company, with the platform to conceptualise, prototype, build, launch and operate any financial use-case.
It’s not so much a case of the timing being critical, but more of seizing the opportunity which Nigel and Clive spotted as the fintech revolution inspired a number of infrastructure changes and open banking became a reality.
How are your services different from traditional banking services?
Railsbank is a leading global open banking and Regtech platform, operating as a “complete financial services utility.” It is an enabler for any company, or brand, which wants to launch, scale and prototype new financial products.
Railsbank is the conduit, the provider of the ‘transactional plumbing’ required by all companies who wish to develop a financial product.
Is there a future for traditional banks and what trends will dominate the next two years?
Very much so, but not in the forefront of distribution.
Railsbank believes that tech companies and brands will be the distribution layer of financial services.
Here is one great example of this. Take the average smartphone and consider that banks take up just 0.1% of eyeball time. Whether it’s wealth, or banking, many of the apps are rarely viewed. Millions of dollars are being invested into something that’s hardly used.
Tech companies, on the other hand, take 20% to 40% of eyeball time and it is because of this that they have the potential to own distribution. What’s more, there is no global infrastructure to enable this trend and this is where Railsbank comes in – it’s basically a platform of ‘lego blocks’ to design, prototype, launch and scale any financial services use-case.
This is all made possible by the power of APIs. Railsbank is at the forefront of the API generation and API economics. Which is why we can quickly overcome all of the infrastructure barriers – including cost, speed, integration, compliance, operations, people, expansion, localisation and vendors – that makes a financial business hard to build.
Cost is one of the biggest barriers and if you wish to bring about greater financial inclusion – a fundamental objective – then these must be reduced. Banking is still far too expensive.
We dramatically reduce the cost and this is one of the main reasons why the company has opened a hub in Southeast Asia, to be able to assist the 400 million people who need access to finance.
Speed is also crucial. Traditionally, a financial product can take anything up to 12 months to bring to market. At the end of last year, we managed to launch a new product for leading insurance company SingLife in just two days. That included a working banking app, with their logo, money in and money out functionality, and a fully operational debit card.
From 2017 Railsbank has been building the core transactional plumbing, this year it is rolling out its platform across South East Asia, Australia and the US, and by 2021 it will have become a powerful distribution engine for financial products on a global scale.
Next year is when we change the model from just distribution to matching together buyers of financial products and suppliers of financial products, as a structural change takes place within the industry.
Railsbank is building the future of financial services in infrastructure and through its API’s, is democratising access to banking for people across the globe.