OUTSOURCING
In outsourcing we trust? The Wirecard scandal has raised serious questions about trust in the financial services supply chain. With most challengers and an increasing number of incumbents relying on third parties, we asked PPS’ Ray Brash and Polymath Consulting’s David Parker to consider the nature of outsourcing Look closely at any sterling banknote and you’ll find a pledge, whispered in tiny letters, that underwrites the entire system of fiat currency exchange: ‘I promise to pay the bearer…’. That promise – that essential bond of trust – maintains a certain global economic order, forging mutual connections of borrowing and lending, depositing and withdrawing, and a sense that, come what may, debts will be paid and promises kept. And this trust doesn’t only flow between consumers and merchants. It is the essential ingredient in the relationship between banks and the service providers to which they increasingly outsource. www.fintech.finance
Indeed, many of the neobanks fawned over by today’s financial commentators would never have had a product in the first place without these strong relationships – of firms – and their millions of customers. especially with payment services providers The same trust was, until recently, (PSPs), which support features boasted by invested in German payments firm Monzo, Revolut and other challengers. Wirecard, whose calamitous fall from Ray Brash, CEO and chair of PPS the DAX 30 to insolvency this summer (previously PrePay Solutions), believes will go down in history as one of the most the fintech ecosystem could not have dramatic failures in the sector. grown without the services of these PSPs. The fallout from this scandal has “The growth of fintech, in the last five shocked fintechs into a frenzy of due years, has been because of outsourcing diligence checks. And yet, while the trust payments,” he says. between banks and PSPs has certainly “Without processors like ourselves, or been bruised by Wirecard, it’s consumers GPS (Global Processing Services), guys like who have once again been left to bear the Monzo and Revolut would not have got brunt of the latest fintech disappointment. into the market, or to where they are, Sarah Kocianski, of fintech consultancy because outsourcing allows companies, 11:FS, believes the damage to consumer particularly fintechs, to really focus on trust caused by the Wirecard meltdown where they add value, which is proposition is ‘likely to be irreparable’. But what of and customer experience.” Wirecard’s partners – like Curve, ANNA PPS, which operates with a dual licence Money, Pockit and U Account in the UK and Belgium in Insourcing is – and the financial institutions preparation for Brexit, often done for counting their lucky stars handles clients’ processing, the wrong reasons... not to have outsourced issuing and prepaid the biggest ones to Wirecard? How should programmes in the UK and I see are egos and they respond to the European Union. With company valuations fact a payments processor customers ranging from UK trusted by millions, and fintech Coconut to a growing David Parker, valued in the billions, list of retailers with prepaid Polymath could betray its customers’ cards, PPS’ services are Consulting trust so badly? depended upon by hundreds
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Issue 6 | ThePaytechMagazine
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