The vice-president for financial institutions and fintech at Wirecard, Jack Harris, talks to Joy Macknight about the European payments giant’s strategy and its post-Brexit market position.

Jack Harris

The payments industry is undergoing extensive modernisation, driven in part by regulations such as the EU’s Payment Services Directive 2, but also by the banks’ desire to revamp their legacy infrastructure to cut costs as well as enhance customer experience. Banks are coming under pressure from fintech start-ups that are more agile and built on eye-catching new technology, but who themselves face difficulties when endeavouring to scale up their business.

But today it is less about competition between these two communities and more about partnership, according to Jack Harris, vice-president for financial institutions and fintech at Wirecard, a German multinational financial services and technology company. He believes that the company is well positioned to act as a trusted provider to both sides and effectively help bridge the divide.

“Wirecard can assist innovative paytech [payments technology] companies in scaling their business and building trust with customers, as well as working with banks as growth partners,” he says. For example, in June Wirecard partnered with paytech start-up Poynt to expand the latter’s smart terminal footprint in Europe and south-east Asia.

Mr Harris continues: “And, vice versa, Wirecard can help banks rapidly move along their digital transformation journey by showing them a different approach to customer acquisition and user experience.” He uses the example of ReiseBank, a DZ Bank subsidiary focusing on travel and currency transaction services, which is using Wirecard to test a digital-only bank.

Breaking China

Additionally, banks are using Wirecard to test new corporate card propositions or to deliver an Alipay proposition to their merchants. “Alipay is a good example, because banks can use our technology to quickly and seamlessly open up the Chinese market to their merchants,” says Mr Harris. National Bank of Greece, for example, is using Wirecard to help domestic merchants offer Alipay to Chinese tourists. The collaboration was announced in April and the service is expected to go live in the third quarter of 2017.

While Wirecard has a suite of services that can help bring a more traditional bank into the digital world, it has also helped to grow smaller, more disruptive companies, such as challenger banks. Monzo, Curve and Revolut all use Wirecard’s card services.

Some banks are using the move to digital to carve out business lines that are not core to their long-term strategy. For example, Wirecard picked up Citibank’s prepaid card services business in North America and its merchant acquiring customer portfolio in Asia-Pacific in June 2016 and March 2017, respectively.

Commenting specifically on the merchant acquiring business, Mr Harris says: “Citibank has divested a non-core asset in its traditional institution banking framework to a dedicated provider that can enhance that book of business. As such, a deal was struck and builds on our strengths in Asia-Pacific.”

Global thinking

Mr Harris counters the prevailing view that merchant acquiring is becoming highly commoditised. “A commodity is something that cannot be differentiated, yet we are seeing the opposite in acquiring. At a financial level there is standardisation but, in the context of ever-increasing customer mobility, it has never been more important in acquiring to be able to think globally and act locally,” he says.

“It requires a technology approach to drive forward the future of merchant acquiring through different channels and use data to deliver the ultimate commerce experience to the customer, who may want to have multiple touch points – physical and online – in the way they interact with a merchant,” Mr Harris continues. “It has never been more of a technology game and, as such, there has never been greater opportunity for differentiation.”

When questioned about the impact the UK’s departure from the EU will have on Wirecard’s business, Mr Harris emphasises that the company has a firm footing in both territories. It holds a German banking licence and is regulated by Germany’s supervisory authority BaFin; additionally, it is a regulated electronic money institution in the UK.

“Wirecard’s transformation as a business is underpinned by these licences, as we use them in an innovative way to support our customers,” says Mr Harris. “They give us the ability to deliver different programmes in any European market.”

Staying put

Mr Harris believes that both the UK and Germany are “gold-standard markets” for innovation and robust regulation, and thinks that other European countries will try to mimic these strong regulatory environments.

Being based in both jurisdictions can only be an advantage in the current situation. “Although it is not clear to date what triggering Article 50 really means, it would be remiss not to think about the possible change to the regulatory environment,” he says. “As we move forward, the need for a two-pillar strategy for managing a European banking initiative may become more prevalent. In that scenario Wirecard is well positioned, as it already has that approach.”

Wirecard is not looking to relocate any of its business out of the UK, according to Mr Harris. “The best structure to deliver on the future just so happens to be the one that we currently have,” he says.

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