CIRCLES Financial utility provider Banking Circle has plans to expand under a new deal struck this summer. CEO Anders la Cour explains why it’s good news all round Banking Circle's potential to expand its sphere of influence received a huge boost this summer with news that it had been bought by Swedish investment group EQT. After several years of development under the wing of Denmark's Saxo Bank, the financial utility company was acquired just a month after the launch of its SME lending product. Banking Circle co-founder and CEO Anders la Cour had already revealed his intention to expand both the company’s products and geographical reach. Now he had the war chest to do it and, just last month, the company struck a partnership agreement with China-based Alibaba. Banking Circle’s first service, a cross-border payments product, emerged in early 2016 and it already had a €60billion run rate for annual payment volumes by the time of its acquisition. With Saxo Bank acting as an incubator that ensured liquidity, Banking Circle was able to grow fast – and, la Cour says, Saxo will retain close links after the EQT deal. “The acquisition by EQT is a major milestone for us because it will give us the funding needed to grow our business,” he says. “Saxo Bank was a great partner for the first part of the journey. They ensured we got a great head start. Because we were not the Saxo Bank core business, we always knew from the beginning that one day we would have to part ways, but they will stay as a virtual partner for us. “In that respect, we now have partnered with EQT, which will deliver the operational and financial resources to help us on the
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next part of the journey. The funding will allow us to acquire licences in new areas and to grow our product capabilities and our geographical presence.” As a financial utility, providing the ‘pipes and plumbing’ for business transactions, as la Cour puts it, Banking Circle's cross-border payment product offers an alternative to the current complex and inefficient correspondent banking model. The company has been a pioneer in its field, but it is not alone in building low-friction, cross-border payment solutions on digital rails, and EQT's backing will allow it to bolster its position in the market. EQT has promised to provide Banking Circle with access to its expertise in the technology, media and telecoms sectors, and its global network of industrial advisers. It said when the deal was announced: “We have followed Banking Circle for several years and are impressed by the company’s management team and unique innovation capabilities. Saxo Bank and Banking Circle’s management team have built an innovative, secure and highly automated platform to make competitive,
The funding will allow us to acquire licences in new areas and to grow our product capabilities and our geographical presence
faster and more transparent payments across borders. Cross-border payments is a large and rapidly growing market dominated by traditional players. Banking Circle has built a disruptive solution with a strong value proposition.”
Bridging the lending gap Using a Cloud-based system built on the Oracle FLEXCUBE platform, the Banking Circle cross-border payments utility can execute business-to-business transactions at a lower cost and within seconds, not days. To banks, the product is sold as an outsourced solution, and for other financial services companies it offers an alternative to managing multiple banking relationships in different regions. By joining Banking Circle, businesses can issue multi-currency international bank account numbers (IBAN) for customers in their own name. Its clients include card acquirers, payment services providers, foreign exchange payment providers and banks. Now that same utility model will be applied to SME lending, which smaller banks have struggled to effectively deliver partly because it can be difficult for them to collect the necessary credit information. The white-labelled service will be offered by partner banks and fintechs under their own branding via an application programming interface (API). La Cour says the entire application will take no more than three days – rather than waiting sometimes weeks for a bank to come to a decision that often proves to be a negative one.
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