Currencycloud takes Lego approach to payments infrastructure: Fintech Interview 22
Cross border payments fintech Currencycloud is offering emerging financial services firms the ability to build a payments infrastructure through its own version of Lego.
Its API based service, which sits in the Amazon Web Services cloud is broken into payments infrastructure modules, each with its own API.
Stephen Lemon, founder and VP corporate development at Currencycloud worked as a foreign exchange broker in the late 90s. This was before fintech but during a period of time when companies were trying to compete with certain business lines of banks, by offering a better service at a lower cost. HiFX, where he was founding team member, was doing just that in the foreign exchange market with a telephone based service.
In 2006 he left and set up a recruitment business for financial services and through that was introduced to Nigel Verdon, who at the time was looking for partners with experience in the foreign exchange sector as part of a plan to build a technology based business.
By 2008, with Lemon on board, they began to look at the opportunity that technology offered. It all began with a philosophical debate about why it is so expensive to transfer money across borders “We both questioned why it was more expensive to send £100,000 to the US than it is to send a package via UPS” said Lemon.
The answer was that the process involved is traditionally very complex with a lot of moving parts. For example you need mechanisms to collect one currency, convert it into another; you need a mechanism to manage the pricing so you can derive a revenue stream; then there are a lot of things related to compliance; as well as the need for a banking network to distribute payments.
It was 2009 when the team started building what eventually became Currencycloud. “The idea behind this was that if you automate as much of the business process as you can you can streamline the process, reduce your overheads, and pass on efficiencies to the end customer,” said Lemon. “We have built a platform that one level takes that entire transaction lifecycle with all modules and put it in one place.”
Each module has its own set of APIs and people building finance firms can use Currencycloud as, what Lemon describes as, “payments lego.”
At the time the idea for Currencycloud was spawned other financial markets such as equities had already gone through changes that had reduced huge processing fees as a result of the introduction of technology. But for cross border payments nothing had emerged.
“We started building this thing called a platform, which in 2009 was quite a new thing,” said Lemon. And it was not easy. “This was before venture capital and fintech took hold in London so we had to do it on a shoestring,” he added. “The early years of the company was hard work.”
But by 2012 the company had completed its first meaningful fundraising series, which included some high profile investors such as Anthemis Group, which gave the company credibility, according to Lemon. This is when things really started moving, said lemon with a new management team put together including a CTO, as well as marketing and sales teams.
“We were the only company at the time offering foreign exchange and payments capabilities behind an API
Such a platform as a service, which according to Lemon are commonplace, was not available anywhere else at the time.
The service was offered to new financial services companies. These are the kind of companies known today as fintechs, but the term wasn’t used back then. “Fintech was mentioned but New Finance was a more common title.”
Companies like Azimo, Transferwise were coming to the world, which were early users of the API. “We were very fortunate at the time that the fintech wave was happening and we were maturing,” said lemon. “We spent the following years growing our presence in fintech.”
Customers today include Travelex, Standard Bank of South Africa, Monzo, Starling, and Revolut, About $1.5bn a month in transactions goes through its platform.
The company also boasts software giant SAP and Google as investors through their venture funds.
Its APIs are available to any company. They can be tried out with no charges unless users want to put them in production.
“We decided our APIs shouldn’t be secretive and opened them up to everyone. But if you wanted a live API in a production environment you had to have a commercial relationship with us,” said Lemon.
Everything is available online for developers in its dev centre. “Everything you need is available such as APIs and software development kits.
This open approach generated customers. Lemon said fintechs began building products using the Currencycloud APIs. “They were coming to us telling us they had built prototypes and now need commercial relationships so they can sign customers.”
“The stack of technology used to provide payments capability is undifferentiated so why spend money and mental bandwidth re-inventing the wheel
Currencycloud now has about 200 staff globally, with its headquarters in the UK. It has an office in New York, a dev team in the Ukraine. About half the company’s employees are IT specialists. It has an EU wide licence, which Lemon said will continue to be the case post-Brexit. It is also licence in every state in the US, which Lemon described as a very expensive and time consuming position to get to
Currencycloud does not get involved in monetizing the service its financial services clients provide but charges through a software as a service model.
Read the previous fintech interviews
Part 21 Tandem, Part 20 Tink, Part 19 Goldex, Part 18 Azimo, Part 17 Yoyo, Part 16 Bud, Part 15 Previse, Part 14 Finastra, Part 13 InstaReM, Part 12 Eucaps, Part 11 AimBrain, Part 10 Meniga, Part 9 TrueLayer, Part 8 InvestCloud, Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology