APIs, RETAIL & ECOMMERCE
Scaling the payments stack Silicon Valley Bank UK both lends to and banks the companies that are building the payment tools and processes of tomorrow. Here David McHenry, who heads up the bank’s global treasury and payments advisory team, ponders the impact of regulation in Europe, the advent of contextual commerce and the disruptive potential of CBDC
It’s three years since the launch of the EU’s groundbreaking revised Payment Services Directive (PSD2) and Britain’s Open Banking framework were introduced – arguably the biggest drivers of change for the world of payments. David McHenry from Silicon Valley Bank (SVB), which continues to invest strongly in payment systems that harness the power of improved connectivity, security and data use, is certainly of that opinion. The California-based commercial bank has boosted headcount at its London office this year to take advantage of private equity investors’ appetite to sink funds into UK-based tech firms. In one of the most recent funding rounds, SVB provided €5million of financing for money-transfer fintech TransferGo, to develop its real-time payment platform used by foreign workers and small firms. Despite global lockdowns, 2020 has been successful for SVB – third-quarter results delivered in October reported its net-income-for-stockholders profit measure was $441.7million, 65 per cent higher than the same quarter of 2019. Reserves set aside for bad loans were reduced as borrowers who had deferred during the COVID-19 lockdown resumed payments. Plus, its full-year outlook forecast growth for profit and loan balances, as well as circa 20 per cent deposit balance gains. McHenry, who heads SVB’s global treasury and payments advisory team for the UK, Europe and Israel, cites PSD2 as the spark that continues to ignite payments innovation. We spoke with him to ask what has been achieved since the legislation's launch in January 2018, and what he predicts for the future. THE PAYTECH MAGAZINE: How has open banking, and other regulations around it, been the leading cause for innovations within the payments sector? DAVID MCHENRY: PSD2 had such a wide scope – it covered everything from open banking to application programming interface (API) guidelines, to how payments were to be processed and how secure customer authentication (SCA) worked. It demanded so much that it has swallowed up financial industry investment for the past three years. You could say some of that
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ThePaytechMagazine | Issue 7
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