The power is now in consumers’ hands

Richard Morrissey, head of corporate sales at Moneycorp Ireland, an international payments and foreign exchange business, sees digitisation as the process whereby nimble, flexible fintech companies are offering simpler, faster and often cheaper financial services.

Fergal Coburn, chief technology officer, AIB, agrees in part. “Traditionally the banks were the power brokers for financial products. Now the power is in consumers’ hands. The modern consumer is hyper-connected to their phone, which means they’re hyper-informed and their expectations are set for instant service, instant value,” says Coburn.

Sean Jevens, chief digital officer of AIB, talks about investments in digital AIB channels, which is hugely centred on meeting those customer expectations by providing the best possible banking experience.

Jevens says: “Using cutting-edge technology, automation and innovative delivery methods, Technology @AIB enables our strategy and the increased digitalisation of our customers’ experience and employee interactions.”

Competition is tight. Morrissey is going head-to-head with the banks on certain services.

“It might be an SME that is selling into Tesco with contracted fees agreed over a three-month period – they need to hedge their funds to eliminate volatility and ensure stable payments.

“Or they might want to import product from Asia which requires dollar payments. We are there to make sure that they don’t lose any profits from FX movements. These SMEs are not in the business of FX, they are in the business of providing goods or services but across different currency markets.”

Digitisation is important in that companies like Moneycorp are plugged into the international banking system and can make international payments on behalf of clients. “On the flip side, it’s very important to our clients that they know we are fully compliant in all markets and fully regulated.”

Morrissey points out that the term fintech derives from the amalgamation of finance and technology. “This means the two systems are talking to each other so that a company can flow data and transactions from their accountancy package directly into a payments gateway. But now we are licensed and regulated and, in some cases, hold full banking licences as well.”

UCD business professor John Cotter is responsible for both research and education in the area of digitisation. He reasonably points out that most people under the age of 45 have probably never used a cheque book and would conduct most of their financial transactions on a smartphone.

“Covid has accelerated this process, but most people can purchase what they need without leaving their desks. Same with banking as it’s all gone online. The cheque is replaced by the app and increasingly physical retail outlines are looking at becoming more like mini-banks themselves.”

He gives the example of a retail outlet like Starbucks which loses a lot of money each time a customer pays for their coffee using a debit or credit card through high intermediary fees.

“To get around this Starbucks can offer their own card, encourage customers to top up their money and in return for earning 100 per cent of the charge Starbucks can offer free coffees while still earning more money and increasing loyalty. Everyone wins, except for the traditional cards.”

Cotter has reviewed other financial companies using fintech to offer services directly to customers. Buying stocks and shares once required a broker account and large fees before any investments were made.

“New robo-investor fintechs such as Acorn out of the US link their customers’ bank accounts to their app. Each time the customer pays with a card the amount is rounded up to the nearest dollar. Over the month this small change is rolled into an investment fund which is automatically invested into products based on customer risk tolerance. A small maintenance fee is charged but the customer only pays commission when large gains are made.

“Already there is something like $2 billion under management made up of small change.”

Patrick Garry is CEO and co-founder of Irish startup Loylap which offers a suite of digitisation tools for businesses with physical presences. Formed 10 years ago, this innovative software company combines disparate pieces of technology into one platform that creates payment and CRM systems directly for each business.

“If you were a sandwich outlet, for example, you could set up an app and share with your customers,” says Garry. “Your customers link their credit cards to the app and every purchase is seamlessly conducted in the app. This means that customers can get access to loyalty rewards and offers from the sandwich shop without having to redeem points or swipe loyalty cards.”

However, this is only part of the platform. On the backend the outlet is getting a lot of important data about their customers. They know who is buying what and can track customer behaviour, looking at popular products, pay thresholds and even get an alert if regular customers are missing. AI can be used to initiate campaigns to reconnect customers before they switch to other competitors.

“There is research, combined with AI, that can see if a customer might be about to lapse and direct the outlet to target a message or campaign to attract that customer back with offers or rewards or just reminders.”

Loylap has grown significantly over the 10 years through smart partnerships with payment or POS suppliers.

“The POS companies have the relationships with the physical businesses, and we allow them to add value to their offering. This has allowed us to grow to more than 1000 customers in the UK, US and across Europe and earn seven-figure revenues.”

In addition, the growth of digital finance has seen a large number of people exploring the potential of crypto assets. As Ireland’s longest standing crypto platform, Bitcove has enabled many of these new users to begin their journey with crypto assets.

James Nagle, CEO of Bitcove, only sees growth ahead. “As demand for these alternative digital assets and protocols increases, it has spurred growth for Bitcove and our operations are satisfying this customer demand.”