FinTech Interview Series: Stephen Lemon of Currencycloud

Biography

A serial entrepreneur, Stephen previously co-founded HiFX where his team provided private individuals better exchange rates and market guidance when making international purchases. In 2012 he co-founded Currencycloud, a "payments tool box", which delivers a Cross Border Payments Platform as a Service. Backed by blue chip firms such as Google, Rakuten Bank, SAP, Anthemis, Atlas Venture and Notion Capital, Currencycloud has grown to process over $10 billion in volume every year.

You’ve been in FinTech for a while – how has the environment changed in the last decade?

intech has a real traction now, and even the most traditional incumbents are not only sitting up and taking notice but actively engaging. Following the GFC, and advances in technology, we've seen a raft of very smart people with great ideas on how to 'do things better' establish focussed businesses.

The prolonged low interest environment has also lead to the rise of the VC - again, smart people with a lot of capital to deploy are investing in these start up entrepreneurs before seeing meaningful revenues so we're seeing early stage companies achieve scale quickly.

We're also seeing a tertiary industry growing as well - accelerators, incubators, shared / collaborative working environments.

Does Distributed Ledger Technology (DLT) have a place in the evolution of payments?

here's a lot of debate on this at the moment. DLT has an apparent value in settlements with many firms such as R3 and Ripple gaining traction with multi bank collaborations, and we're even seeing central banks participating in POCs and experiments with the technology.

It is however, still largely chatter and it remains to be seen if the ROIs justify the immense capital expenditure required for a wholesale change. I suspect that we will see solutions and products being released by smaller firms first with the larger incumbents having no choice but to follow later.

You’ve created a truly international business, do you have any favourite destinations?

ong Kong is a favourite city - such an exciting place to be. San Francisco is also great, with the obvious tech and vc community there.

Are the wheels coming off the FinTech bandwagon?

ot at all. IMO the ecosystem is in rude health. The funding environment has slowed a little, but necessarily so. Well run companies will always get funding but investors have taken a step back from more speculative investments. The FOMO has receded.

Do you see digital/challenger banks taking significant market share?

t will be interesting to watch this post PSD2. It's never been easier for FinTechs, banks and financial institutions to collaborate and I think banking is going to experience it's iPhone moment. We've been through the unbundling of financial services and now we're going through a re-bundling. Both non-bank FinTechs and neo-banks are now able to offer services similar to traditional banks without the need for heavy regulation themselves, leveraging incumbents as utilities.

The market is changing too. There's no doubt that millenials view the world and financial services differently to even gen-X; you would do if you've always had a smart phone with a vibrant app ecosystem and didn't know anything different.

I am however, skeptical that the market will bear the weight of so many new bank start ups. There are what, 50 new licences granted or about to be granted by the Bank of England? I see a lot of 'me too' challengers but you need more than an exciting app with expense management features to win.There are a coupe with unique value propositions who are well place to go after specific target markets, but i'm afraid to say that I think many will fail.

What are the biggest trends in payme to watch for in 2018?

LT gaining traction. Proliferation f faster payments networks - the US just announced real time payments out of no-where (just earlier this year, the common view was it wouldnt happen for 10 years). More central bank experimentation with DLTs and digital assets.

What are the biggest regulatory issues you face?

egulation is only ever going to become more onerous and demanding. We're seeing a raft of changes at the moment - MLD4, MIFID ii, WTR2, GDPR, PSD2 (with talk of PSD3 and even 4 already underway) and it's a real challenge to keep on top of them all. Your compliance team is now one of your biggest overheads, but t the same time it can be a differentiator - cost of entry to the club has never been as high.