John Daly: The ABCs of paying your bill by phone
After a dinner in London the other week, with younger acquaintances, I unexpectedly experienced the fresh wind of progress.
When the bill arrived, the total was calculated per head, plus tip. The entire table offered their smartphones as payment. I was the only one extending cash.
Enquiring what banks they all used, my ears prickled to hear a list of names unknown to me, including Revolut, Monzo, Fidor, Alipay, Nubank, Chime, and WeChat.
These are neobanks, financial institutions that have no physical branches; their customers access them via mobile apps and personal computer platforms.
Also known as challenger banks, these flexible upstarts are aiming to break the monopoly of the established titans, whose acronym names adorn every major thoroughfare in the land.
Emerging from the burgeoning financial technology sector, where finance and technology have fused to deliver consumer services in banking, insurance and investing, the neobank is fast-gathering popular traction amongst a younger, tech-savvy demographic.
Advances in IT connectivity and the widespread growth of smartphones allow clients to open accounts via the internet, without the need to ever physically visit a bank.
Linking your account to the phone effectively transforms the mobile into a digital wallet, enabling transactions and payments without the need for card or cash.
“Fingertip connectivity gives cheaper and faster banking experiences,” said one of my dining companions.
“Traditional banks are changing to try to keep up, but they’re not doing it fast enough.”
Neobanks offer the advantages of speed, choice, convenience, and remote access from anywhere with a wifi signal.
Without the need for the physical infrastructure of a branch network, they can offer competitive deals and more personalised services.
“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another,” says Klaus Schwab, founder and executive chairman of the World Economic Forum, which is best known for its annual Davos gathering.
“In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before,” he says.
The economist details how the first industrial revolution used steam power to mechanise production, the second revolution harnessed electric power to create mass production, and the third integrated electronics and information technology in automating production.
The fourth industrial revolution is building on a digital era characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
“The speed of current breakthroughs has no historical precedent, and is evolving at an exponential, rather than a linear, pace, disrupting almost every industry in every country,” says Mr Schwab.
Over the past three years, an influx of clients has opted for neobanks’ apps and online transactions, which they think are more efficient than visiting branches and doing paperwork.
Revolut is one of the most popular neobanks in the UK, with a customer base of eight million.
Founded in 2015, by Nikolay Storonsky, Revolut has a banking licence from the Bank of Lithuania, and has raised in excess of €300m in funding.
As a result of Brexit, it plans to move responsibility for its European payments from London to Dublin and aims to extend its Irish workforce to up to 50 people.
Financial technology, or FinTech, uses technology to deliver financial services and to compete with traditional financial methods.
The organisations in Ireland that support the sector include FinTech and Payments Association of Ireland, FinTech Ireland, the IDA, and the banking business group, Banking Payments Federation Ireland, and Financial Services Ireland.
The sector currently employs 7,000 people, which is likely to have grown to 10,000 by the end of 2020.
One of the pioneers is Prepaid Financial Services, an Irish company that provides e-wallets and physical and virtual prepaid cards, accounts, and consumer and business current accounts across the UK and eurozone.
“The regulatory landscape is changing in many countries, with regulators seeming to follow the guidance of the UK, where we are authorised and regulated,” says founder, Noel Moran.
He says the company will build on what it has achieved in Europe and operate in around a dozen or more countries in Africa and Asia.
“The speed at which we can go live in a new country is one of the fastest in the industry, as our platform is custom-designed to be plug and play,” he says.
With programmes active in 25 countries, Prepaid transacts in 23 currencies across many technology platforms.
The company aims to stay a step ahead in smartphone and web-enabled electronic money payments, mobile payments, and currencies, by using apps.
“As a challenger, it is vital we move with the latest trends to maintain our status.
“Every market where there is cash is our market, and every business that needs to take payments is our market. And not too many businesses can say that,” says Mr Moran.
