Paresh Davdra on fintech, blockchain and the future of banks

Paresh Davdra is the CEO and co-founder of a London-based S1.7billion fintech empire. This comprises of online foreign exchange service, RationalFX, which was launched in 2005, and money transfer service, Xendpay, which began in 2012 and is aimed at lower income individuals in emerging regions. We learn about his two businesses and wider views on fintech in a lightly edited Q&A below.


Who are the users of RationalFX and Xendpay and how are the two services used differently?

RationalFX is the UK’s first online foreign exchange service; it aims to create a more efficient service for customers, including high net worth individuals and SMEs that require sending money overseas.

Typically, individuals make international payments because they are purchasing an overseas property, or have rental income, or bills associated with the property purchase, or perhaps they are moving abroad or coming back to the UK. With business clients, again their requirements may vary, but they are normally small businesses purchasing or selling products, or services, from overseas and need to exchange currencies.

Xendpay is an online money transfer service – the first of its kind to offer a ‘Pay-what-you-want’ model, its mission is to reduce the cost of remittances and to introduce more transparency in the field of international payments.

Payments tend to be smaller with individuals sending money back home to support their families through paying bills or paying for their children’s education.

On the business side, usually it’s the sole traders that are typically in the early stages of growing their businesses and need to make overseas payments. We understand how hard this stage can be for a small business, having once been at this stage ourselves.

Negotiating with banks can be challenging – we ensure this need is removed and the client gets market leading rates that can be transferred quickly and easily online. Fundamentally, the money goes direct to the end user, with no middle man taking costs out of the process.


How do you see Xendpay developing in the short, medium and long term?

Big things – we’re dedicated to moving with the times and tech is a big part of that. In both RationalFX and Xendpay, we are developing our businesses in creative ways so that we are not just moving with the times, but we are committed to innovating and shaping the future.

We continue to collect and generate our product proposition based on customer feedback, and by researching the latest trends and innovations within the market. The growth of Xendpay has exceeded all expectations as we tailor a fully online servicing proposition. Technology of course, remains a key pillar of our product strategy and we are continuing to develop new features and functionality.

For example, we have recently launched a fully integrated API plug-in that can connect with other businesses to manage their international payments.


Do you think banks will have a diminished role in the future?

Banks make a lot of money from moving money overseas. Essentially FX brokers, such as Xendpay, still need banks to make international payments so there is, for now, a continuing role to be played by traditional banks. Banks also understand the need to drive more innovation within their organisations and through their networks. For example, a number of banks are now setting up technology hubs and incubators. They are also starting to pull significant funds into the FinTech environment.

The need to change has certainly been realised by most banks and those that function on old infrastructures will only feel the pinch in the future. The financial crisis has also impacted trust levels that individuals and businesses once had, and thereby opened up more doors for smaller players to excel.

Clearly, those businesses that offer something that significantly enhances the customer’s experience are the ones who will most excel. This continues to be a key part of our business model.


Is the Blockchain all it is hyped up to be?

Blockchain does seem to be one of the technology buzzwords at the moment, however, there’s still a lot of debate surrounding it. People are questioning whether 2017 will finally be its year or whether it will be a number of years before it really comes to the forefront.

I think it all heavily dependents on regulations and acceptance from the banking world and the governments, which we’re yet to see, to be honest. Nevertheless, we continue to see a number of developments in this area, with brands like Ripple for example, breaking the norm.

However, I believe we still have to wait and see in terms of the development and application of Blockchain technology. There is still a lot to come yet, in my opinion. Right now, all that we can do is ensure that our platforms are ready and can integrate with the technology once it’s available.


What do you think are the most interesting trends in tech are at the moment?

Outside of Blockchain, there are a number of tech trends to watch. The fast approaching rise of 5G is particularly one for the FX payments industry as it will help to propel the growing mobile payments sector. Through enabling money to be transferred faster, 5G will allow a more efficient transfer process and ultimately more payments. This ties in closely with the broader trends we are seeing with the improvement in mobile technologies and enhancements made in each successive generation. These advancements in mobile technology have also allowed for better payment functionality, which will see the popularity of mobile payments continue to grow.

I think a great number of people in tech will also be focusing on the Revised Payment Service Directive (PSD2), a key regulatory directive that will change the European fintech industry in 2018. The directive is bound to have an important impact on the payments industry through the introduction of maximum processing times – developing the Single Euro Payments area even further.

Beyond that, I think everyone in tech will be looking forward to the flying cars that Uber is developing –a number of people would appreciate flying through the traffic to get to meetings! And perhaps drones can also start delivering currency?


If you were to launch another company, what would it do?

I would love to start a food truck company. I’m a big fan of food from around the world and as an entrepreneur I have quite a few ideas to help improve the market. The recent rise of delivery apps has shown that people have an appetite for the delivery of more than just takeaway, however the controversies surrounding the treatment of workers detracts from the appeal.


What other fintech startups have you been impressed by and why?

I have found myself very impressed by goHenry – a startup that has come up with some really clever ways to educate children about money, through the use of debit cards linked to an online account, under the watchful eye of their parents. It’s an ingenious use of both card and mobile payments.


Will cryptocurrencies ever really catch on?

There is evidence that cryptocurrencies are growing not only in popularity but in legitimacy as forms of payment, even though the progress remains slow. Bitcoin has started to make headway, as it is now increasingly recognised in markets around the world. But other crypto currencies, such as NXT or Litecoin, are not making as much of an impact as Bitcoin. Some companies are now slowly starting to accept crypto currencies but there are still significant challenges for cryptocurrencies, especially with increasing reports of regulation and money laundering issues on a frequent basis.


Is Universal Basic Income the answer to a post-automation world?

I wouldn’t be so certain. Whilst 57% of the world’s jobs are at risk of being automated, technology still requires human interaction and integration. Humans prefer to talk to humans so transformation will take time. Although with computers learning faster than people and AI leaving the realm of science fiction to come close to reality while growing at a rapid rate – post automation seems to be an increasingly real possibility. With 4.78 robots for every 100 workers in Korea, automation is a tangible risk to job security not only within sectors like manufacturing but also for underwriters, fast food chefs, labourers and more, particularly in the developing world.

With this in mind, a universal basic income in a post-automated world doesn’t seem right – people need to be challenged and have the opportunity to grow and develop over the course of their working lives. As was the case with the introduction of computers, if introduced correctly, new technologies will provide workers with the opportunity to excel in new areas, learning new in-demand skills and the ability to seek new pastures. 


Is there anything else you wish to share?

We are currently looking forward to our next set of challenges around growth – we are looking at expanding into new territories. With this in mind, we’re very aware of the latest geopolitical developments and the challenges this creates, such as the impact of Brexit on accessing business solutions and other potential implications this may have, however, we are quite confident in our way forward.

Finally, we are close to launching our innovative payments processing engine that can plug into various back office systems, as a standalone brand. We are very excited about this new proposition.


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