Looping FinTech Into Cross-Border Capability

Cross-border payments are complex but key in today’s global, interconnected market. While companies have naturally turned to their large financial institutions to handle their international transaction needs, U.K. payments company Saxo Bank believes that businesses need more targeted expertise for their cross-border payments.

Earlier this year, the company debuted its Saxo Payments platform for financial technology companies to extend their reach globally, and to provide the international services their own clients need.

But last month, Saxo went a step further by launching Banking Circle at this year’s Money 20/20 event. As an online FinTech network, Banking Circle links payments players to the infrastructure they need to facilitate international payments and help their merchants pay suppliers faster. So fast, in fact, that the platform enables one-day global payment settlement, according to Saxo founder and CEO Anders la Cour.

PYMNTS spoke with la Cour about why Saxo wants to position FinTech players with their own ability to enable cross-border payment services. According to the executive, the quickly expanding world of cross-border commerce means payments must come along for the ride.

“The financial tech industry is the primary driver of payments in eCommerce,” la Cour said. “They have the need to go global and increase the countries they’re delivering payments to.”

[bctt tweet=”FinTech needs to go global and increase the countries they’re delivering payments to”]

Here’s how it works: Saxo Payments has partnered with other major banks around the globe to link banking networks, as well as Oracle to build the platform, and used international bank account number (IBAN) accounts in multiple currencies. This means that payment or banking companies that join Banking Circle don’t need to strike their own partnerships with other banks in an overseas market.

This interconnected web of FinTech players emerges for the sole purpose of providing cross-border payments support, as opposed to a single, large financial institution that may offer international payments services in addition to a suite of others.

“Due to the fact that we’re set up only with the purpose of cross-border, we can do so in a very lean, effective way,” la Cour said, adding that whereas international payments can generally take a few days, Saxo’s Banking Circle allows funds to land in a bank account within a day.

But speed isn’t the only concern for companies that need to pay international suppliers. Local regulations are often a cause for friction, especially when a smaller payments player needs to maintain compliance.

La Cour told PYMNTS that Saxo takes care of the regulatory hurdles.

“Our global compliance network enables us to allow non-licensed payment gateways to offer their services,” the executive explained. “Given our compliance and regulatory framework, we are able to deal with all of those requirements on behalf of a client.”

If speed and compliance are two pillars of cross-border payments success, la Cour said that the third is affordability. He told PYMNTS that Saxo’s ability to offer competitive pricing for its services is a result of the company’s specialization in cross-border transactions.

“We provide a solution narrowly focused on doing payments globally,” he said. “A lot of banks are focused on a broad range of services on a regional basis. We are globally focused.”

He added that this global origination, made up of the webbing of connections between partner and client banks and payment companies, along with a scalable, cloud-based platform on which all of those connections meet, gives member customers of Banking Circle the most affordable access to cross-border payment capabilities.

“The combination of the Oracle platform and our cross-border banking networks provides us the ability to give lower rates with our payments and do it at a higher speed,” la Cour said, adding that the services are typically a “fraction” of the cost from typical service providers.

Reports have pegged Banking Circle as a way for alternative FinTech players to compete against these large FIs. But according to la Cour, Saxo sees itself as a partner to global banks, not a competitor – and all in an effort to help FinTech companies go global, so their merchant clients can, too.

“We enable the fast-growing financial technology industry to handle their payments in foreign exchange in a way so they can keep growing across borders,” la Cour said. “We believe that’s a really compelling proposition.”