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Welcome to Executive Conversations by the Papers.
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I'm Dwayne Jeffery.
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In this episode, I'm joined by Mikkel Grunlicke, president at Banking Circle.
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We're exploring how Banking Circle is reshaping cross-border payment flows and what it takes to connect global financial institutions in a fragmented payments landscape.
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For someone meeting Banking Circle for the first time, how would you describe the company and what is it that you actually do?
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Thanks, Wayne, and good to be here.
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So Banking Circle is a very tech-forward settlement infrastructure globally.
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And what I mean by that is, you know, traditionally you have had banks sending money from A to B over great distances, and it'll take days.
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You don't know what arrives, you don't know what it will cost you, et cetera.
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The idea in the premise here is really direct integration into the central banks, the direct clearing capability, and that gives that instant capability.
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If you want to send money from Amsterdam to Australia, it'll be instant.
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And what we have built is that global connectivity.
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We're still building it out.
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So we have almost filled in Europe now, and now we're sort of going truly on the global undercurrencies, which is speed, agility, one single integration into banking circle, regardless of what you do, then you're set for the future and you can just add on uh the our global capabilities.
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So again, tech enabled, quick, global, and client-centric.
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Fantastic.
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And like if I have to imagine who you're serving, what are the type of customers that you're dealing with?
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Are those financial institutions, fintechs, merchants?
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Yeah.
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Who are you dealing with?
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It's a great question.
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So again, I come from traditional banking where platforms were set up to serve all industries, and therefore it was not particularly tailor-made.
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Now, banking sort of was set up with the clear premise of servicing regulated NPFIs, right?
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We don't have retail clients, we don't really have corporate clients.
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So the idea is really the platform and the products we have developed is very specifically tailored to regulated NPFIs.
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And that means we are an aggregator of aggregators.
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So we are that infrastructure layer.
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And that's why you're seeing the enormous flows coming through us because it's very tailored, it's very scalable, and we are literally an aggregator of aggregators.
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Absolutely.
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So of course, moving money across borders is still for most businesses slower and more expensive than moving anything else.
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Um, when you look at that, what's the bigger thing that banking circle is actually setting out to build?
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Yeah, so with banks, that's exactly what we are trying to address, insofar that as long as we have the self-clearing abilities in a given currency, and again, Australia is a great example, then we can make it instant, right?
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So our premises really payments and money should flow like data, right?
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It should be instant.
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We all remember sort of pre-iPhone and sort of it's just such a different world.
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We got the iPhone and a completely new world opened up.
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This is the same.
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Now we do instant in euro, we do instant in you know, all that, and we're so used to that now.
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We want to do that globally.
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And that's what we enable without waiting for regulatory developments and other things.
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We directly enable that.
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Uh, so that's really the vision of banking sugar in all the major currencies.
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Absolutely.
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And you know, a lot of people might say, look, you have the the global networks, you have all of these different reels already.
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Uh, why isn't an instant already, right?
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We have the technology.
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Some have already solved it on a on a local level.
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What is sort of like the bottleneck or what's keeping it from being truly instant and truly global all at the same time?
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Well, so so I think step instant is is a good example of how long it takes.
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So the idea was born, was it 25 years ago, give or take, and it takes there are even 30 years ago, I believe, and then it takes you know 10, 15, 20 years to actually go live.
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And it's a regulatory uh uh environment.
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It's the it's really the sort of policy and the prioritization of really making that for your underlying citizens, if you will.
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And that's where some of really forward thinking.
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India is a great example.
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They've been very forward thinking, and the technology is great, and and others just don't see the need because they frankly they don't connect the dots.
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So what we're seeing emerge in in some of this sort of what traditional would have been called emergent markets or developing markets, actually, they are much more technological and payment advanced than most other places because they've sort of leaped ahead, if you will.
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So it's very policy politicians, and that drive needs to be there.
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Um, so I think that's the biggest obstacle, frankly.
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Absolutely.
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So I want to talk a little bit more about growth and and of course where that happens.
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So whenever banking circle goes live in a new country, what changes for the businesses that are already on your platform?
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Yeah.
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So um we have now, we say 850 plus clients.
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It's more than 900 uh uh as we speak.
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And this is really, we think it's largely the who is who.
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We have a few to still fill in.
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Um but we speak with our clients, and they clearly they have joined us and become clients in our current capabilities, but they ask us for things.
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And we are very client-centric.
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Banking struggle and infrastructure was really built around clients a little bit, what we talked about earlier.
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It's very specific for the interest, but there are certain clients that have just helped us to come really sharp on the product and the rollout.
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That client dialogue is continuous.
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So when we are sort of starting to do Euros, they say, hey, what about Polish slots?
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What about Check Room and what's your plans?
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And we hear these things a lot.
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And then at some point of time, and it becomes an internal privatization as well.
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It becomes, well, we see that much demand.
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So we need to build this, and then we we start building that.
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Clearly, lots of planning, regulatory interaction.
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And we have a lot of ships in the sea because sometimes it's actually quite quick, and the regulator is very engaged, very practical, and the technical integration is easier because they are more tech forward.
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Other times it can be incredibly slow.
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So you need that, but the prioritization, it's really following our clients where they need us.
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And then clearly, some markets, and especially within the EU, are easier just from a regulatory perspective, sometimes even for a technical integration.
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Sometimes when you go a little bit further, I feel there are requirements around uh it can be capitalization, it can be around ownership, it can be many things.
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And clearly there are many factors to consider.
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But end of the day, we do follow our clients.
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We want to go to the major currencies, we look at other currencies if there is enough demand.
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And that's really the agility we have built.
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We can do that.
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It's a mindset, but it's also a tech platform, an internal setup uh that really enables that.
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Absolutely.
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So maybe let's walk through sort of like a scenario.
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Like let's take a global payments company that wants to be able to pay those merchants out in Australia, like you mentioned, on a local currency, they want to do it quickly without setting up their own entity there.
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How does it look through banking circle today versus how it looks today?
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Yeah, so so basically if we assume that it's with an existing client, so they've been onboarded, they are on our API, then there's no need to onboard again because we have onboarded that entity.
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The technical integrations through the API have been done.
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So that's very easy.
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Now, to get the Australian uh dollar payout capability, it's literally, well, figuratively speaking, it's more or less just like ticking a box in our in our system, and they will be enabled.
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It's a little bit more complicated than that, but it's almost as easy.
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Uh and then you're enabled.
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Now, with sort of legacy banks, what happens is okay, you need that.
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Then we need to first onboard you, yeah, uh proper onboarding.
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You need to do the technical integration.
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And we are talking, this is not weeks or months, this is often years, from my experience, right?
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And then you can start doing the payouts if the commercials are attractive enough for a big bank to actually think about it.
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Because we don't really have those countries, the onboarding is done, the single API and the technical integrations, so it's literally just the green commercials, and then off you go.
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And it is as simple as that.
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Absolutely.
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So when you when you look at that model, of course, you go into different countries, different regions, get the licenses, are able to provide that.
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Do do customers ever leave your platform, or are they just like, hey, we don't have to deal with this anymore, so we much rather go with the reels that you're building in front of us uh until the volumes are there and then we continue to grow and go into other markets?
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It's a very good question, and it's sort of very tropical.
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So at least for me, I sat with a client literally just before I came here, and we talked, and they have very significant flows.
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And uh she was saying everything I hear, it's sort of almost too good to be true.
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Why hadn't I heard about you?
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Right, and what what what has happened at banking circle and clearly we come from a kind of pure startup?
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Was let's get a foot in the door with clients so they can see what we can do and experience that.
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And then it grows naturally for their because firsthand they experience what it means for their operations, for their cost base, for their speed, go to market, etc.
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So naturally it just grows and very fast, and that's sort of what's happening.
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Now, the flip side of that is we maybe haven't been good enough to get our name out there.
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We have been almost that quiet infrastructure because naturally we have grown very quickly from getting a client for a specific use case and then it just expands, expands, expands.
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And so again, being self-critical, we maybe need to get our name a little bit more out there, but typically it just tries to very specifically your question because I took a D-Root, we see very, very seldom the clients leave us.
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And it's typically if clients do something through us that we haven't agreed and it's flow, we actually don't want to see.
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Yeah, right?
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So if it's agreed, flow and not a problem.
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But if we start seeing flow that was not agreed, then we need to take action.
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So it's more that way around.
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I cannot think, and I've been at banking for 11 months, I cannot think about one single client that has left us.
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Um yeah, I actually can't.
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There's great.
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So that's absolutely, but it also feels like we we see a lot of this modularity now, right?
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Like in fintech and in banking, is that well, if your core strength isn't exactly this, get the best partner you can, expand in those regions, but build on top of that, right?
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If you have a great user interface or you're a great payments processor, would you go in and get a license in every single uh country to do the payouts or say, hey, who's my great partner?
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Can I focus on the front-end side, the customer acquisition, the building out my product features and capabilities, and then partnering with the right partner to actually go in to those markets?
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Yeah, that that that's exactly right.
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And you know, in today's world, to build Mortala is sort of the standard, right?
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And some do it incredibly well.
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And also some of our clients clearly, what we were, and I think there was some real vision uh uh on the account of the the two founders, we built that Mortala approach very early on, right?
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And then with time, we have gotten the right licensing, the right product capabilities, etc.
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But we started with that model approach very early.
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And that's allowed us to really have state-of-the-art technology, but also product development and scalability.
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So that but our clients, the modularities, it's it's evolved very quickly.
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And that means the speed and the go-to market is just sensational nowadays.
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And if you look back 10 or 15 years ago, it's been a huge leap, right?
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To your point, it's really impressive.
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Absolutely.
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So I think you already touched upon uh sort of like the technicality, like having built a single API for moving money globally.
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I think there's plenty of firms who offer that, right?
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You have Niam, you have Air Wallace among them.
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Um, and a lot of them promise pretty much the same thing on the outside.
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If we strip away all of the marketing, what does banking circle actually do that most of those others can't?
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Now you see, now you you put me sort of in a tricky spot because what I'm gonna say, people say, well, of course it's gonna say that, right?
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So it's but I'm gonna say it anyway because it is actually the truth.
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And our clients know this.
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We have one single API.
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And you know, for example, we typically we build our own, and when we expand into countries, we actually expand it organically.
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The exception to that was Australia, where we completed the acquisition of ASL in August last year.
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And clearly it was acquisition, they had their own API, etc.
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Now it's fully on our API.
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So it's already one single API, and this is what, nine months after the acquisition?
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It was on our API, so I think it was April, so let's call it seven months after.
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That's the priority of getting to one single API.
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So we have one single API.
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All our clients listening, and sort of you will speak with will say that because they see it.
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Now, I know of competitors, even some of our clients, to be very honest, they say one single API is one of those things where you know it needs to be tested because it's not always true, but it's a you almost need to say it, you know what I mean?
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That's uh sort of but truly, and as I said, of course I would say that, and uh, but we are one single API, and that's really the power of it.
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Got it.
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Yeah.
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So how much of that comes down to being a licensed bank that clears directly in local markets rather than just the technology that sits on top of other people's banks?
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Yeah, so so we we don't want to be dependent on you always dependent on stakeholders, right?
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And that's sort of the obvious, but we don't want to have correspondent bank and they'll ask them because what that means is that operationally it's not the same experience, it's not the same speed, the STP is different, the cost is different, you know, not a single API necessarily, it could be, but so i it makes it very, very different, and that's really so I think that's sort of good technology, but the magic sources to combine good technology with the licensing, right?
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Because then you get the speed, you control your own destiny, if you will.
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Uh, you can operate on your own risk appetite.
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And again, we risk appetite we haven't talked about, but how we screen and the data we can generate, because you know, unlike the legacy bank, is clearly we have good data infrastructure, we have a good data lack, the way we can harness that and see and use AI, frankly, is something that many others cannot, because it's legacy technology, so therefore they can't harness that data.
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So you need to, when we talk about sort of banking circle and the single API and the technology, it is really sort of through and through how we use data, how we use technology, how we think, the mindset around clients.
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That's really sort of it.
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But that licensing piece, that last mile is incredibly important and it's incredibly difficult to replicate.
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Absolutely.
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Yeah.
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So banking circle now moves over a trillion euros a year.
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1.5.
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1.5 trillion is my apologies.
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Um, and on the order of the biggest names in payments, like you see so many other companies talking about how much they're moving, 1.4 trillion all the way up to bigger numbers that we're seeing.
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Um, as you try to become the infrastructure that others rely on, is staying invisible behind your clients an advantage, or uh is it a problem that you eventually have to fix?
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Let's say it's a great question.
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It is a question we're asking ourselves.
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Um and as I mentioned before, when I sort of meet a new potential client, and often it's you know, especially from the US, uh, and they might have very bold ambitions, and they're new to Europe and UK, but they'll come and say, Oh, we had never heard about banking circle.
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And I must say, every time I hear that, it hurts a little bit, right?
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Um, so there's this continuous conversation, but it's taking a little bit sort of uh more speed or gathering more speed now.
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Okay, do we need to be better on the branding front?
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Do we need to be more forward-leaning?
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And as I think I mentioned before, it's great this thing, client starts with on a specific use case, see what we can, and then we grow massively together.
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That's fantastic because that's based on real sort of user and text, and they see what we can do, but we need to be better at the branding piece.
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And in fairness, we we we brought in a new team and a new head about a year and a half ago, and she's done a phenomenal job.
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I think we probably need a 2.0 now and just really, but again, my personal view, internal discussions, but we need to do a better job.
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Yeah, and I fully get that.
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I think nowadays, if you really look at fintech companies, financial companies, everybody's trying to be a part of that conversation.
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Like if you look at Stripe was probably one of the first payments processes that invested in branding and in marketing and being a logo.
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Now you see all the others follow you as well, being on the POS devices to having m massive events and bringing people in as well.
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And I think, of course, if you're moving money on the on, yeah, if you're moving money for those companies, where do you fit within that conversation?
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How big is your audience that you're actually speaking to?
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Um, but I do believe it's very important to be visible.
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I I think you are exactly right.
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And what we're seeing sometimes is the clients of our clients, and not retail clients, but so they can be SMEs, they can be big corporations, even.
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They're like, okay, great, we want to mandate you, but behind you it's banking circle.
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Who is banking circle?
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So we need to create that bigger awareness.
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It's not just with our clients, it's actually also our clients' clients.
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Yeah.
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And that's where we need just to get a bit sharper.
00:19:11.200 --> 00:19:25.200
But, you know, again, just to also be a little bit fair of everything that has happened over the years, and we are where we are, but have been so many things, and what has been built is really powerful.
00:19:25.359 --> 00:19:33.839
Okay, maybe we still have a little bit of work to do on branding and how we persist ourselves, if you will, but it has been incredibly busy for the team.
00:19:34.000 --> 00:19:35.039
But we'll get after it.
00:19:35.200 --> 00:19:35.759
Yeah, absolutely.
00:19:35.839 --> 00:19:41.039
And you're also building something that's going to last, hopefully, for decades to come.
00:19:41.119 --> 00:19:51.680
So it's much more of a journey that uh as you grow, as you get a reputation, as you continue to have more clients, and you already have more than 900 of those clients, that that builds on itself.
00:19:51.759 --> 00:19:59.519
And growing organically, especially nowadays, is probably 10 times better than growing through paid advertising or through marketing tricks.
00:19:59.839 --> 00:20:00.240
Completely.
00:20:00.400 --> 00:20:00.720
Completely.
00:20:00.799 --> 00:20:16.799
It needs to be sustainable, it needs to be valid, uh, additive, it needs to all these things rather than it's easy to go out and buy commercials or ads or pay for, you know, that that's not really sort of uh the right way for us, certainly, but we can still do so much more, right?
00:20:16.880 --> 00:20:20.240
And you say we're building something to last for decades and decades.
00:20:20.319 --> 00:20:23.200
So our founder says that it's for eternity.
00:20:23.279 --> 00:20:24.319
So there you have it, right?
00:20:24.400 --> 00:20:25.200
Very modestly.
00:20:25.440 --> 00:20:26.720
Yeah, yeah, absolutely.
00:20:26.880 --> 00:20:35.519
So I want to talk a little bit more about the the owning those reels and especially markets that maybe uh for a lot of companies are still out of reach.
00:20:35.759 --> 00:20:49.759
Um, when we look at the map, sort of like on a global scale, you see that a lot of the biggest flows in the world are going through, of course, the United States, China, India, Brazil, um, and but a lot of those flows are still going to partner banks.
00:20:49.920 --> 00:21:00.799
Um, so if I would ask you, does banking circle now realistically already sit on those reels, or is that something that you're looking to build out in the next couple of years?
00:21:01.039 --> 00:21:05.359
Yeah, so we need to build out further, without doubt.
00:21:05.680 --> 00:21:08.960
We haven't provided sort of an end state.
00:21:09.119 --> 00:21:15.359
This is where we are gonna end up in terms of the clearing capabilities when it comes to too flat.
00:21:15.519 --> 00:21:21.519
But you mentioned a number of markets that we have looked at and we will look at again.
00:21:21.759 --> 00:21:30.160
I think we have a very good sort of almost pipeline for the next couple of years, but we need to think about then what?
00:21:30.400 --> 00:21:30.559
Yeah.
00:21:30.720 --> 00:21:33.200
And after that time period, we need to start now.
00:21:33.440 --> 00:21:41.680
So that's why in a couple of weeks we are actually sitting and having this big strategy, global expansion, so right, and that's really what's next.
00:21:41.839 --> 00:21:46.480
But you know, the premise is really we want to self-clear all the major currencies.
00:21:46.640 --> 00:21:50.880
Then you can say is it the major 15, major 20, major 25, right?
00:21:50.960 --> 00:21:53.440
And it's somewhere in between there.
00:21:53.759 --> 00:21:59.839
And then in some cases, it might be so painful getting our own wealth that we'll rely on correspondent banks.
00:22:00.240 --> 00:22:00.880
Yeah.
00:22:01.920 --> 00:22:04.640
But that's got to be sort of unique cases, right?
00:22:04.720 --> 00:22:09.200
So that's really, and then we are building our stablecoin well as well.
00:22:09.279 --> 00:22:10.640
We got our casp license, right?
00:22:10.720 --> 00:22:13.440
So we have leaned in heavily on digital assets.
00:22:13.839 --> 00:22:18.799
Uh, and we got our cash license in the bank, so license in Luxembourg.
00:22:18.880 --> 00:22:24.480
So now we can do meekly compliant uh stable coins on and off-ramp, uh, which is a big thing.
00:22:24.640 --> 00:22:31.680
We are gonna expand that and we are gonna build out the capabilities, and we have a very clear roadmap for that.
00:22:31.839 --> 00:22:36.799
And the way we see stablecoin is really as another payment rail, if you will.
00:22:36.880 --> 00:22:38.160
It's another mechanism, right?
00:22:38.240 --> 00:22:45.359
So if you sit on stablecoin, then okay, you want to actually off-ramp it and get checked for UNA, we can do it instantly.
00:22:45.599 --> 00:22:48.079
24, 7365 days.
00:22:48.720 --> 00:22:59.279
And that's the power of having having sort of our digital asset strategy side by side with our Fiat capabilities, and it's on one single API, right?
00:22:59.440 --> 00:23:03.359
There was always we built digital asset, it's on the API, period.
00:23:03.759 --> 00:23:05.920
Uh, so that can be incredibly powerful.
00:23:06.240 --> 00:23:19.680
Absolutely, because especially the the conversation around stable coins, I'm having probably way too much at this moment, but uh there's trillions of dollars, I think over 30 trillion dollars per year in in stable coin volume.
00:23:19.839 --> 00:23:22.400
But a lot of that is attributed to trading, right?
00:23:22.559 --> 00:23:25.039
Markets going in and out of decisions of of crypto.
00:23:25.200 --> 00:23:31.440
And but there's a growing part of that that's actually about uh payments processing uh and doing that.
00:23:31.599 --> 00:23:43.440
So where do you when when again we when you focus on when you become a stablecoin issuer and you're doing on-ramp and off-ramp, how does that sit next to the fiat processing that you do?
00:23:43.519 --> 00:23:48.480
Do you think it will replace it, or do you again think it's a a a complement to that?
00:23:48.640 --> 00:23:48.960
Yeah.
00:23:49.119 --> 00:23:53.440
No, so so there's everybody will have an opinion about that.
00:23:53.519 --> 00:24:03.920
I think our position, which I share, but it's also a banking circle position, is there's a clear use case and space for both fiat and stablecoin side by side.
00:24:04.160 --> 00:24:16.799
And again, earlier today I had a meeting with a quite forward-leaning company that everything they do in treasury already is actually stablecoin in terms of how they manage liquidity and it's it's that which is very smart.
00:24:16.960 --> 00:24:25.119
And then you have it sort of as payment and just moving money, but it's also how do you run operationally and sort of truly instant, right?
00:24:25.359 --> 00:24:33.839
So that's uh that that are definitely those use cases, but it doesn't take, in our view, the need for fiat and actually uh having that.
00:24:34.000 --> 00:24:39.519
So again, we see it as another very important sort of mechanism, if you will.
00:24:39.599 --> 00:24:44.640
I don't want to call it payment mechanism because it's much more than that, that sit next to the fiat.
00:24:45.039 --> 00:25:04.880
Uh and and we think also when you look at sort of maybe some of the more exotic currencies, that stable coin will play a big role and maybe replacing part of that flow, even more than sort of some of the Western European or sort of Western uh uh currencies.
00:25:05.039 --> 00:25:06.240
So we'll see.
00:25:06.319 --> 00:25:14.720
I think it's gonna be sort of two slightly different worlds, but a very clear use case in both worlds for stablecoin and fiat.
00:25:14.960 --> 00:25:19.519
But it might just be slightly different weighted depending on sort of where end of all it is.
00:25:19.839 --> 00:25:20.480
Absolutely.
00:25:20.720 --> 00:25:22.720
So I hear a lot of different things, right?
00:25:22.880 --> 00:25:29.279
It's having licenses, owning the entire network, um, stable coins, of course.
00:25:29.519 --> 00:25:37.359
That's a massive investment, not just in capital, but also in a lot of the time spent just to get those licenses to build everything out.
00:25:37.599 --> 00:25:43.680
Why do you think that's a better strategy than just partnering up with other banks and just moving on?
00:25:43.759 --> 00:25:49.920
Just quick to market, go into as many markets as possible versus putting all those years and all of that investment in there.
00:25:50.160 --> 00:25:54.160
Well, I I think you're only gonna solve part of the issue, right?
00:25:54.240 --> 00:26:04.559
So almost the front end and yes, you could do a single API, yes, you could do a better onboarding that's traditional banks, but you'll go half the way.
00:26:04.720 --> 00:26:06.559
Operationally, it's very different.
00:26:06.720 --> 00:26:17.519
The instant capability and truly instant would you would not be able to achieve it in the same way through partner banks, at least sort of to the scale we are trying to do in the breadth.
00:26:17.680 --> 00:26:21.119
Um, and then frankly, listen, there's a cost element to it, right?
00:26:21.279 --> 00:26:36.960
With with the legacy banks, uh the cost for your sort of per payment, and they don't look quite at it, but the huge machinery that have been created on the back of that, it's it's very much driven with sort of human capital rather than actually built the technology.
00:26:37.200 --> 00:26:46.720
So I think sort of it it would almost erode at least sort of the full vision of what our founders haven't go all the way.
00:26:46.880 --> 00:26:54.000
But you're right, sometimes a regulatory process and actually getting into a sort of market or a particular currency, it is.
00:26:54.640 --> 00:26:55.920
And it is, right?
00:26:56.079 --> 00:27:00.160
Sometimes it's better than that, but it's not quick.
00:27:00.480 --> 00:27:08.160
But I think if you look at sort of what we have now and what's coming, so by end of the year, we would have filled in Europe, yeah.
00:27:08.240 --> 00:27:10.000
Is I except for Romania.
00:27:10.640 --> 00:27:11.839
Europe is done.
00:27:12.079 --> 00:27:16.160
And then Asia, we have great tribes, we already have some, but that's gonna come.
00:27:16.480 --> 00:27:17.759
Canada will come.
00:27:18.000 --> 00:27:25.519
Uh so these are sort of probably all 12, 18 months out, everything I mentioned, right?
00:27:25.680 --> 00:27:26.960
And then we need to do more long.
00:27:27.279 --> 00:27:32.480
So we're already far along that curve, and we have built the expertise.
00:27:32.799 --> 00:27:37.200
And we don't stand still and say, okay, then we wait for that, or we wait for that.
00:27:37.359 --> 00:27:38.720
We keep going, right?
00:27:38.799 --> 00:27:41.839
And and so we have a very good team uh doing that.
00:27:42.000 --> 00:27:55.759
So it would be a pity if we started to dilute their original vision because you would only go halfway and it wouldn't be truly instant, at least consistently, it would be more expensive, it's not gonna be the same operational experience, all that.
00:27:55.920 --> 00:28:01.279
So, you know, personally, I'm I'm excited, but the founders sort of set up and what they've done so far.
00:28:01.599 --> 00:28:03.759
Uh, I think our clients are excited as well.
00:28:03.839 --> 00:28:05.920
And I think that's where we really differentiate ourselves.
00:28:06.000 --> 00:28:07.279
If we had gone half the way.
00:28:07.519 --> 00:28:08.160
Yeah.
00:28:08.480 --> 00:28:09.839
Yeah, yeah, absolutely.
00:28:10.000 --> 00:28:18.000
And I think if you look at the market right now, there's been some some large acquisitions, of course, of uh like MasterCard has acquired BVNK.
00:28:18.240 --> 00:28:22.000
Um, we've seen global payments and world pay getting together.
00:28:22.079 --> 00:28:24.319
So there's a lot of movement within the market.
00:28:24.480 --> 00:28:36.000
Um, originally, of course, the the the story behind uh banking circles that it was a spin-off and then later on uh uh acquired or at least invested heavily into by uh EQT.
00:28:36.319 --> 00:28:39.119
Um what does the future for you guys look like?
00:28:39.359 --> 00:28:46.640
Is that something where, again, you did an acquisition in Australia, which much more uh uh was one of the few exceptions?
00:28:46.960 --> 00:28:56.240
Is it to continue to go on that growth path of continue to grow where your customers are growing, getting into those licenses, or do you see another strategy that could play out?
00:28:56.480 --> 00:29:01.279
Well, I I I think it is really following our client base and clearly expand our client base.
00:29:01.759 --> 00:29:11.039
And there are sort of some verticals we are looking at, and because if you look at the product and the capability we have created, there are so many use cases.
00:29:11.279 --> 00:29:16.720
So we are looking to sort of expand some of the verticals in terms of clients, uh, certainly.
00:29:16.880 --> 00:29:21.759
And then as you say, we are rolling out the global capabilities with the digital assets.
00:29:22.000 --> 00:29:26.000
But you know, I wouldn't expect us to do sort of a massive pivot.
00:29:26.160 --> 00:29:31.920
Clearly, we adjust to the market environment, to what competitors do, what the clients want.
00:29:32.079 --> 00:29:38.720
So I don't want to say, oh, this is never gonna happen, but I see it as very much an organic story for us.
00:29:39.119 --> 00:29:46.559
Uh we are, we broke sort of the profitability point about three years ago, maybe 33, 36 months ago.
00:29:46.640 --> 00:29:48.400
Uh, that was sort of the first month.
00:29:48.640 --> 00:29:57.759
And now, because of just the growth and how we invested earn on planform, very scalable, great operating leverage, we are very profitable, right?
00:29:58.000 --> 00:30:03.599
So we have plenty of sort of growth capital and to invest, it's that's not really the constraint.
00:30:03.680 --> 00:30:09.599
It's more doing it sort of as quickly as we can, but very sustainable and in the right way.
00:30:09.839 --> 00:30:13.759
Now, with Australia, there was a unique opportunity to acquire, right?
00:30:13.839 --> 00:30:17.599
And Australia is a very interesting market, an underserved market.
00:30:18.480 --> 00:30:21.039
Would we do that again elsewhere?
00:30:21.279 --> 00:30:24.640
Never say never, but it would need to be really unique, right?
00:30:24.720 --> 00:30:28.799
And that's sort of so it's not gonna be sort of the core of our path, if you will.
00:30:29.279 --> 00:30:29.839
Got it.
00:30:30.079 --> 00:30:37.440
So I tend to be a very future-focused person, very upbeat, always very optimistic about the future.
00:30:37.599 --> 00:30:40.960
Um, however, sometimes we we we deal with roadblocks.
00:30:41.119 --> 00:30:57.599
So I like to ask my guest, if there's something that you can change right now or that you could eliminate, or something that desperately needs to change in our industry or in your industry specifically, like for instance, does regulation need to be easier or um does it need to be easier to move money across the world?
00:30:57.759 --> 00:31:05.680
What would that be for you and especially for for banking circle to you know help even more of your clients and continue that growth?
00:31:06.160 --> 00:31:07.359
That that's a great question.
00:31:07.519 --> 00:31:13.279
And I'm I'm sort of uh as you ask the question, I'm thinking because I want to give a very honest personal answer.
00:31:13.359 --> 00:31:15.359
I don't want to offend anyone either, right?
00:31:15.440 --> 00:31:18.319
Because as you I try to be positive and optimistic.
00:31:18.480 --> 00:31:31.680
So it's that's sort of so no, I listen, I think um and it does vary, but the policy and the policy making is incredibly slow.
00:31:31.839 --> 00:31:37.839
And it also impacts the regulators, sorry, some regulators and the speed.
00:31:38.079 --> 00:31:44.640
I must say some regulators are incredibly minded to the future, right?
00:31:44.720 --> 00:31:56.559
And we have some great examples and great interactions where they're really strategic, think about where they want to get to for the next decades, and really drive that.
00:31:57.440 --> 00:32:10.400
Other places, and I think the EU is a good example where the sort of the policies and what you want and what you need and facilitate that, it's desperately slow, right?
00:32:10.480 --> 00:32:12.880
Uh and that's maybe by design.
00:32:13.279 --> 00:32:17.519
So I would say that's the biggest sort of friction point in general.
00:32:17.680 --> 00:32:22.319
But I also want to say some places it's actually really, really strong.
00:32:22.400 --> 00:32:29.680
And I think many other places can learn from those few places that actually do it incredibly well from a policy and regulatory.
00:32:30.000 --> 00:32:36.480
I know it's two separate things, but I don't want to differentiate particularly because they do go a little bit hand in hand.
00:32:36.720 --> 00:32:37.279
Absolutely.
00:32:37.440 --> 00:32:42.400
Well, I want to thank you very much for joining us here at Executive Conversations and hope to see you soon.
00:32:42.559 --> 00:32:44.240
After this, thank you very much, Fame.
00:32:44.720 --> 00:32:48.880
If you like this episode, hit like, follow, and subscribe for more.
00:00:00.000 --> 00:00:02.560
Welcome to Executive Conversations by the Papers.
00:00:02.720 --> 00:00:04.160
I'm Dwayne Jeffery.
00:00:04.320 --> 00:00:09.439
In this episode, I'm joined by Mikkel Grunlicke, president at Banking Circle.
00:00:09.679 --> 00:00:18.800
We're exploring how Banking Circle is reshaping cross-border payment flows and what it takes to connect global financial institutions in a fragmented payments landscape.
00:00:20.000 --> 00:00:25.679
For someone meeting Banking Circle for the first time, how would you describe the company and what is it that you actually do?
00:00:26.399 --> 00:00:28.480
Thanks, Wayne, and good to be here.
00:00:28.800 --> 00:00:36.719
So Banking Circle is a very tech-forward settlement infrastructure globally.
00:00:36.799 --> 00:00:45.039
And what I mean by that is, you know, traditionally you have had banks sending money from A to B over great distances, and it'll take days.
00:00:45.200 --> 00:00:49.200
You don't know what arrives, you don't know what it will cost you, et cetera.
00:00:49.439 --> 00:00:58.640
The idea in the premise here is really direct integration into the central banks, the direct clearing capability, and that gives that instant capability.
00:00:59.039 --> 00:01:04.000
If you want to send money from Amsterdam to Australia, it'll be instant.
00:01:04.239 --> 00:01:06.799
And what we have built is that global connectivity.
00:01:06.959 --> 00:01:08.239
We're still building it out.
00:01:08.400 --> 00:01:26.799
So we have almost filled in Europe now, and now we're sort of going truly on the global undercurrencies, which is speed, agility, one single integration into banking circle, regardless of what you do, then you're set for the future and you can just add on uh the our global capabilities.
00:01:26.879 --> 00:01:31.840
So again, tech enabled, quick, global, and client-centric.
00:01:32.159 --> 00:01:32.719
Fantastic.
00:01:32.959 --> 00:01:37.920
And like if I have to imagine who you're serving, what are the type of customers that you're dealing with?
00:01:38.000 --> 00:01:41.280
Are those financial institutions, fintechs, merchants?
00:01:41.359 --> 00:01:41.439
Yeah.
00:01:41.680 --> 00:01:42.959
Who are you dealing with?
00:01:43.359 --> 00:01:44.400
It's a great question.
00:01:44.560 --> 00:01:53.200
So again, I come from traditional banking where platforms were set up to serve all industries, and therefore it was not particularly tailor-made.
00:01:53.280 --> 00:02:00.079
Now, banking sort of was set up with the clear premise of servicing regulated NPFIs, right?
00:02:00.239 --> 00:02:03.760
We don't have retail clients, we don't really have corporate clients.
00:02:03.920 --> 00:02:12.879
So the idea is really the platform and the products we have developed is very specifically tailored to regulated NPFIs.
00:02:12.960 --> 00:02:15.439
And that means we are an aggregator of aggregators.
00:02:15.520 --> 00:02:17.199
So we are that infrastructure layer.
00:02:17.360 --> 00:02:26.960
And that's why you're seeing the enormous flows coming through us because it's very tailored, it's very scalable, and we are literally an aggregator of aggregators.
00:02:27.120 --> 00:02:27.759
Absolutely.
00:02:28.000 --> 00:02:36.639
So of course, moving money across borders is still for most businesses slower and more expensive than moving anything else.
00:02:36.800 --> 00:02:41.599
Um, when you look at that, what's the bigger thing that banking circle is actually setting out to build?
00:02:41.919 --> 00:02:55.039
Yeah, so with banks, that's exactly what we are trying to address, insofar that as long as we have the self-clearing abilities in a given currency, and again, Australia is a great example, then we can make it instant, right?
00:02:55.120 --> 00:02:59.840
So our premises really payments and money should flow like data, right?
00:02:59.919 --> 00:03:00.560
It should be instant.
00:03:00.639 --> 00:03:04.800
We all remember sort of pre-iPhone and sort of it's just such a different world.
00:03:04.879 --> 00:03:07.520
We got the iPhone and a completely new world opened up.
00:03:07.680 --> 00:03:08.400
This is the same.
00:03:08.479 --> 00:03:13.599
Now we do instant in euro, we do instant in you know, all that, and we're so used to that now.
00:03:13.919 --> 00:03:15.520
We want to do that globally.
00:03:15.599 --> 00:03:20.240
And that's what we enable without waiting for regulatory developments and other things.
00:03:20.479 --> 00:03:22.879
We directly enable that.
00:03:23.039 --> 00:03:27.520
Uh, so that's really the vision of banking sugar in all the major currencies.
00:03:27.759 --> 00:03:28.319
Absolutely.
00:03:28.479 --> 00:03:34.960
And you know, a lot of people might say, look, you have the the global networks, you have all of these different reels already.
00:03:35.039 --> 00:03:37.280
Uh, why isn't an instant already, right?
00:03:37.360 --> 00:03:38.479
We have the technology.
00:03:38.719 --> 00:03:41.520
Some have already solved it on a on a local level.
00:03:41.680 --> 00:03:48.800
What is sort of like the bottleneck or what's keeping it from being truly instant and truly global all at the same time?
00:03:49.120 --> 00:03:54.479
Well, so so I think step instant is is a good example of how long it takes.
00:03:54.560 --> 00:04:06.719
So the idea was born, was it 25 years ago, give or take, and it takes there are even 30 years ago, I believe, and then it takes you know 10, 15, 20 years to actually go live.
00:04:06.800 --> 00:04:10.080
And it's a regulatory uh uh environment.
00:04:10.240 --> 00:04:22.399
It's the it's really the sort of policy and the prioritization of really making that for your underlying citizens, if you will.
00:04:22.639 --> 00:04:24.639
And that's where some of really forward thinking.
00:04:24.800 --> 00:04:25.920
India is a great example.
00:04:26.079 --> 00:04:34.480
They've been very forward thinking, and the technology is great, and and others just don't see the need because they frankly they don't connect the dots.
00:04:34.720 --> 00:04:49.120
So what we're seeing emerge in in some of this sort of what traditional would have been called emergent markets or developing markets, actually, they are much more technological and payment advanced than most other places because they've sort of leaped ahead, if you will.
00:04:49.360 --> 00:04:55.199
So it's very policy politicians, and that drive needs to be there.
00:04:55.519 --> 00:04:58.639
Um, so I think that's the biggest obstacle, frankly.
00:04:58.959 --> 00:04:59.519
Absolutely.
00:04:59.759 --> 00:05:04.079
So I want to talk a little bit more about growth and and of course where that happens.
00:05:04.240 --> 00:05:11.360
So whenever banking circle goes live in a new country, what changes for the businesses that are already on your platform?
00:05:11.600 --> 00:05:12.000
Yeah.
00:05:12.319 --> 00:05:17.600
So um we have now, we say 850 plus clients.
00:05:17.759 --> 00:05:21.199
It's more than 900 uh uh as we speak.
00:05:21.279 --> 00:05:25.439
And this is really, we think it's largely the who is who.
00:05:25.759 --> 00:05:27.920
We have a few to still fill in.
00:05:28.240 --> 00:05:38.639
Um but we speak with our clients, and they clearly they have joined us and become clients in our current capabilities, but they ask us for things.
00:05:38.800 --> 00:05:40.639
And we are very client-centric.
00:05:40.879 --> 00:05:46.079
Banking struggle and infrastructure was really built around clients a little bit, what we talked about earlier.
00:05:46.240 --> 00:05:52.720
It's very specific for the interest, but there are certain clients that have just helped us to come really sharp on the product and the rollout.
00:05:53.120 --> 00:05:55.519
That client dialogue is continuous.
00:05:55.839 --> 00:06:00.000
So when we are sort of starting to do Euros, they say, hey, what about Polish slots?
00:06:00.240 --> 00:06:02.079
What about Check Room and what's your plans?
00:06:02.160 --> 00:06:04.000
And we hear these things a lot.
00:06:04.079 --> 00:06:08.079
And then at some point of time, and it becomes an internal privatization as well.
00:06:08.319 --> 00:06:10.639
It becomes, well, we see that much demand.
00:06:10.800 --> 00:06:14.240
So we need to build this, and then we we start building that.
00:06:14.399 --> 00:06:17.519
Clearly, lots of planning, regulatory interaction.
00:06:18.000 --> 00:06:30.959
And we have a lot of ships in the sea because sometimes it's actually quite quick, and the regulator is very engaged, very practical, and the technical integration is easier because they are more tech forward.
00:06:31.199 --> 00:06:34.240
Other times it can be incredibly slow.
00:06:34.480 --> 00:06:39.360
So you need that, but the prioritization, it's really following our clients where they need us.
00:06:39.600 --> 00:06:48.639
And then clearly, some markets, and especially within the EU, are easier just from a regulatory perspective, sometimes even for a technical integration.
00:06:48.800 --> 00:06:57.839
Sometimes when you go a little bit further, I feel there are requirements around uh it can be capitalization, it can be around ownership, it can be many things.
00:06:58.000 --> 00:07:02.800
And clearly there are many factors to consider.
00:07:03.439 --> 00:07:06.959
But end of the day, we do follow our clients.
00:07:07.120 --> 00:07:11.759
We want to go to the major currencies, we look at other currencies if there is enough demand.
00:07:11.920 --> 00:07:14.160
And that's really the agility we have built.
00:07:14.319 --> 00:07:15.120
We can do that.
00:07:15.279 --> 00:07:23.040
It's a mindset, but it's also a tech platform, an internal setup uh that really enables that.
00:07:23.360 --> 00:07:24.000
Absolutely.
00:07:24.240 --> 00:07:27.839
So maybe let's walk through sort of like a scenario.
00:07:28.000 --> 00:07:38.399
Like let's take a global payments company that wants to be able to pay those merchants out in Australia, like you mentioned, on a local currency, they want to do it quickly without setting up their own entity there.
00:07:38.560 --> 00:07:42.639
How does it look through banking circle today versus how it looks today?
00:07:42.800 --> 00:07:55.199
Yeah, so so basically if we assume that it's with an existing client, so they've been onboarded, they are on our API, then there's no need to onboard again because we have onboarded that entity.
00:07:55.360 --> 00:07:58.959
The technical integrations through the API have been done.
00:07:59.199 --> 00:08:00.639
So that's very easy.
00:08:00.879 --> 00:08:13.519
Now, to get the Australian uh dollar payout capability, it's literally, well, figuratively speaking, it's more or less just like ticking a box in our in our system, and they will be enabled.
00:08:13.600 --> 00:08:17.600
It's a little bit more complicated than that, but it's almost as easy.
00:08:17.759 --> 00:08:19.680
Uh and then you're enabled.
00:08:19.920 --> 00:08:25.360
Now, with sort of legacy banks, what happens is okay, you need that.
00:08:25.680 --> 00:08:29.839
Then we need to first onboard you, yeah, uh proper onboarding.
00:08:30.000 --> 00:08:32.159
You need to do the technical integration.
00:08:32.639 --> 00:08:38.000
And we are talking, this is not weeks or months, this is often years, from my experience, right?
00:08:38.799 --> 00:08:45.440
And then you can start doing the payouts if the commercials are attractive enough for a big bank to actually think about it.
00:08:46.000 --> 00:08:55.519
Because we don't really have those countries, the onboarding is done, the single API and the technical integrations, so it's literally just the green commercials, and then off you go.
00:08:55.679 --> 00:08:57.360
And it is as simple as that.
00:08:57.679 --> 00:08:58.240
Absolutely.
00:08:58.480 --> 00:09:06.639
So when you when you look at that model, of course, you go into different countries, different regions, get the licenses, are able to provide that.
00:09:07.039 --> 00:09:20.240
Do do customers ever leave your platform, or are they just like, hey, we don't have to deal with this anymore, so we much rather go with the reels that you're building in front of us uh until the volumes are there and then we continue to grow and go into other markets?
00:09:21.360 --> 00:09:24.000
It's a very good question, and it's sort of very tropical.
00:09:24.080 --> 00:09:33.360
So at least for me, I sat with a client literally just before I came here, and we talked, and they have very significant flows.
00:09:33.759 --> 00:09:40.080
And uh she was saying everything I hear, it's sort of almost too good to be true.
00:09:40.240 --> 00:09:42.000
Why hadn't I heard about you?
00:09:42.159 --> 00:09:48.320
Right, and what what what has happened at banking circle and clearly we come from a kind of pure startup?
00:09:48.480 --> 00:09:55.679
Was let's get a foot in the door with clients so they can see what we can do and experience that.
00:09:56.159 --> 00:10:08.559
And then it grows naturally for their because firsthand they experience what it means for their operations, for their cost base, for their speed, go to market, etc.
00:10:08.879 --> 00:10:13.120
So naturally it just grows and very fast, and that's sort of what's happening.
00:10:13.360 --> 00:10:18.480
Now, the flip side of that is we maybe haven't been good enough to get our name out there.
00:10:18.639 --> 00:10:29.519
We have been almost that quiet infrastructure because naturally we have grown very quickly from getting a client for a specific use case and then it just expands, expands, expands.
00:10:29.759 --> 00:10:42.960
And so again, being self-critical, we maybe need to get our name a little bit more out there, but typically it just tries to very specifically your question because I took a D-Root, we see very, very seldom the clients leave us.
00:10:43.200 --> 00:10:50.960
And it's typically if clients do something through us that we haven't agreed and it's flow, we actually don't want to see.
00:10:51.039 --> 00:10:51.600
Yeah, right?
00:10:51.759 --> 00:10:54.080
So if it's agreed, flow and not a problem.
00:10:54.240 --> 00:10:58.080
But if we start seeing flow that was not agreed, then we need to take action.
00:10:58.159 --> 00:11:00.720
So it's more that way around.
00:11:00.960 --> 00:11:07.600
I cannot think, and I've been at banking for 11 months, I cannot think about one single client that has left us.
00:11:08.080 --> 00:11:10.240
Um yeah, I actually can't.
00:11:10.559 --> 00:11:10.960
There's great.
00:11:11.200 --> 00:11:16.720
So that's absolutely, but it also feels like we we see a lot of this modularity now, right?
00:11:16.799 --> 00:11:26.879
Like in fintech and in banking, is that well, if your core strength isn't exactly this, get the best partner you can, expand in those regions, but build on top of that, right?
00:11:26.960 --> 00:11:36.960
If you have a great user interface or you're a great payments processor, would you go in and get a license in every single uh country to do the payouts or say, hey, who's my great partner?
00:11:37.120 --> 00:11:46.559
Can I focus on the front-end side, the customer acquisition, the building out my product features and capabilities, and then partnering with the right partner to actually go in to those markets?
00:11:46.799 --> 00:11:48.559
Yeah, that that that's exactly right.
00:11:48.799 --> 00:11:52.879
And you know, in today's world, to build Mortala is sort of the standard, right?
00:11:52.960 --> 00:11:54.720
And some do it incredibly well.
00:11:54.879 --> 00:12:08.480
And also some of our clients clearly, what we were, and I think there was some real vision uh uh on the account of the the two founders, we built that Mortala approach very early on, right?
00:12:09.039 --> 00:12:13.679
And then with time, we have gotten the right licensing, the right product capabilities, etc.
00:12:13.919 --> 00:12:17.120
But we started with that model approach very early.
00:12:17.279 --> 00:12:23.679
And that's allowed us to really have state-of-the-art technology, but also product development and scalability.
00:12:23.919 --> 00:12:29.759
So that but our clients, the modularities, it's it's evolved very quickly.
00:12:30.000 --> 00:12:34.639
And that means the speed and the go-to market is just sensational nowadays.
00:12:34.720 --> 00:12:38.799
And if you look back 10 or 15 years ago, it's been a huge leap, right?
00:12:38.879 --> 00:12:40.480
To your point, it's really impressive.
00:12:40.720 --> 00:12:41.360
Absolutely.
00:12:41.600 --> 00:12:49.600
So I think you already touched upon uh sort of like the technicality, like having built a single API for moving money globally.
00:12:49.759 --> 00:12:52.320
I think there's plenty of firms who offer that, right?
00:12:52.399 --> 00:12:55.519
You have Niam, you have Air Wallace among them.
00:12:55.600 --> 00:12:59.919
Um, and a lot of them promise pretty much the same thing on the outside.
00:13:00.240 --> 00:13:06.720
If we strip away all of the marketing, what does banking circle actually do that most of those others can't?
00:13:07.120 --> 00:13:15.919
Now you see, now you you put me sort of in a tricky spot because what I'm gonna say, people say, well, of course it's gonna say that, right?
00:13:16.000 --> 00:13:19.519
So it's but I'm gonna say it anyway because it is actually the truth.
00:13:19.759 --> 00:13:22.000
And our clients know this.
00:13:22.399 --> 00:13:25.200
We have one single API.
00:13:25.600 --> 00:13:33.919
And you know, for example, we typically we build our own, and when we expand into countries, we actually expand it organically.
00:13:34.159 --> 00:13:41.759
The exception to that was Australia, where we completed the acquisition of ASL in August last year.
00:13:41.919 --> 00:13:45.519
And clearly it was acquisition, they had their own API, etc.
00:13:45.840 --> 00:13:48.159
Now it's fully on our API.
00:13:48.320 --> 00:13:53.039
So it's already one single API, and this is what, nine months after the acquisition?
00:13:53.279 --> 00:13:57.919
It was on our API, so I think it was April, so let's call it seven months after.
00:13:58.080 --> 00:14:01.120
That's the priority of getting to one single API.
00:14:01.279 --> 00:14:03.200
So we have one single API.
00:14:03.440 --> 00:14:08.879
All our clients listening, and sort of you will speak with will say that because they see it.
00:14:09.120 --> 00:14:25.519
Now, I know of competitors, even some of our clients, to be very honest, they say one single API is one of those things where you know it needs to be tested because it's not always true, but it's a you almost need to say it, you know what I mean?
00:14:25.600 --> 00:14:33.279
That's uh sort of but truly, and as I said, of course I would say that, and uh, but we are one single API, and that's really the power of it.
00:14:33.759 --> 00:14:34.159
Got it.
00:14:34.240 --> 00:14:34.639
Yeah.
00:14:34.960 --> 00:14:44.320
So how much of that comes down to being a licensed bank that clears directly in local markets rather than just the technology that sits on top of other people's banks?
00:14:44.879 --> 00:14:53.919
Yeah, so so we we don't want to be dependent on you always dependent on stakeholders, right?
00:14:54.000 --> 00:15:25.440
And that's sort of the obvious, but we don't want to have correspondent bank and they'll ask them because what that means is that operationally it's not the same experience, it's not the same speed, the STP is different, the cost is different, you know, not a single API necessarily, it could be, but so i it makes it very, very different, and that's really so I think that's sort of good technology, but the magic sources to combine good technology with the licensing, right?
00:15:25.759 --> 00:15:29.600
Because then you get the speed, you control your own destiny, if you will.
00:15:29.759 --> 00:15:32.960
Uh, you can operate on your own risk appetite.
00:15:33.120 --> 00:15:57.919
And again, we risk appetite we haven't talked about, but how we screen and the data we can generate, because you know, unlike the legacy bank, is clearly we have good data infrastructure, we have a good data lack, the way we can harness that and see and use AI, frankly, is something that many others cannot, because it's legacy technology, so therefore they can't harness that data.
00:15:58.080 --> 00:16:10.320
So you need to, when we talk about sort of banking circle and the single API and the technology, it is really sort of through and through how we use data, how we use technology, how we think, the mindset around clients.
00:16:10.399 --> 00:16:11.840
That's really sort of it.
00:16:12.159 --> 00:16:20.480
But that licensing piece, that last mile is incredibly important and it's incredibly difficult to replicate.
00:16:20.720 --> 00:16:21.360
Absolutely.
00:16:21.519 --> 00:16:22.000
Yeah.
00:16:22.320 --> 00:16:26.559
So banking circle now moves over a trillion euros a year.
00:16:26.799 --> 00:16:27.519
1.5.
00:16:27.919 --> 00:16:30.000
1.5 trillion is my apologies.
00:16:30.159 --> 00:16:40.960
Um, and on the order of the biggest names in payments, like you see so many other companies talking about how much they're moving, 1.4 trillion all the way up to bigger numbers that we're seeing.
00:16:41.120 --> 00:16:51.440
Um, as you try to become the infrastructure that others rely on, is staying invisible behind your clients an advantage, or uh is it a problem that you eventually have to fix?
00:16:51.679 --> 00:16:53.279
Let's say it's a great question.
00:16:53.360 --> 00:16:55.679
It is a question we're asking ourselves.
00:16:55.919 --> 00:17:12.559
Um and as I mentioned before, when I sort of meet a new potential client, and often it's you know, especially from the US, uh, and they might have very bold ambitions, and they're new to Europe and UK, but they'll come and say, Oh, we had never heard about banking circle.
00:17:12.640 --> 00:17:18.160
And I must say, every time I hear that, it hurts a little bit, right?
00:17:18.720 --> 00:17:27.839
Um, so there's this continuous conversation, but it's taking a little bit sort of uh more speed or gathering more speed now.
00:17:28.000 --> 00:17:31.039
Okay, do we need to be better on the branding front?
00:17:31.200 --> 00:17:33.519
Do we need to be more forward-leaning?
00:17:33.759 --> 00:17:43.119
And as I think I mentioned before, it's great this thing, client starts with on a specific use case, see what we can, and then we grow massively together.
00:17:43.279 --> 00:17:51.119
That's fantastic because that's based on real sort of user and text, and they see what we can do, but we need to be better at the branding piece.
00:17:51.519 --> 00:17:58.400
And in fairness, we we we brought in a new team and a new head about a year and a half ago, and she's done a phenomenal job.
00:17:58.640 --> 00:18:07.519
I think we probably need a 2.0 now and just really, but again, my personal view, internal discussions, but we need to do a better job.
00:18:07.680 --> 00:18:08.960
Yeah, and I fully get that.
00:18:09.039 --> 00:18:15.839
I think nowadays, if you really look at fintech companies, financial companies, everybody's trying to be a part of that conversation.
00:18:16.000 --> 00:18:24.640
Like if you look at Stripe was probably one of the first payments processes that invested in branding and in marketing and being a logo.
00:18:24.720 --> 00:18:32.240
Now you see all the others follow you as well, being on the POS devices to having m massive events and bringing people in as well.
00:18:32.400 --> 00:18:39.279
And I think, of course, if you're moving money on the on, yeah, if you're moving money for those companies, where do you fit within that conversation?
00:18:39.440 --> 00:18:42.480
How big is your audience that you're actually speaking to?
00:18:42.640 --> 00:18:45.279
Um, but I do believe it's very important to be visible.
00:18:45.440 --> 00:18:46.799
I I think you are exactly right.
00:18:46.880 --> 00:18:56.079
And what we're seeing sometimes is the clients of our clients, and not retail clients, but so they can be SMEs, they can be big corporations, even.
00:18:56.319 --> 00:19:00.880
They're like, okay, great, we want to mandate you, but behind you it's banking circle.
00:19:01.039 --> 00:19:02.400
Who is banking circle?
00:19:02.640 --> 00:19:04.559
So we need to create that bigger awareness.
00:19:04.640 --> 00:19:08.160
It's not just with our clients, it's actually also our clients' clients.
00:19:08.240 --> 00:19:08.480
Yeah.
00:19:08.720 --> 00:19:11.039
And that's where we need just to get a bit sharper.
00:19:11.200 --> 00:19:25.200
But, you know, again, just to also be a little bit fair of everything that has happened over the years, and we are where we are, but have been so many things, and what has been built is really powerful.
00:19:25.359 --> 00:19:33.839
Okay, maybe we still have a little bit of work to do on branding and how we persist ourselves, if you will, but it has been incredibly busy for the team.
00:19:34.000 --> 00:19:35.039
But we'll get after it.
00:19:35.200 --> 00:19:35.759
Yeah, absolutely.
00:19:35.839 --> 00:19:41.039
And you're also building something that's going to last, hopefully, for decades to come.
00:19:41.119 --> 00:19:51.680
So it's much more of a journey that uh as you grow, as you get a reputation, as you continue to have more clients, and you already have more than 900 of those clients, that that builds on itself.
00:19:51.759 --> 00:19:59.519
And growing organically, especially nowadays, is probably 10 times better than growing through paid advertising or through marketing tricks.
00:19:59.839 --> 00:20:00.240
Completely.
00:20:00.400 --> 00:20:00.720
Completely.
00:20:00.799 --> 00:20:16.799
It needs to be sustainable, it needs to be valid, uh, additive, it needs to all these things rather than it's easy to go out and buy commercials or ads or pay for, you know, that that's not really sort of uh the right way for us, certainly, but we can still do so much more, right?
00:20:16.880 --> 00:20:20.240
And you say we're building something to last for decades and decades.
00:20:20.319 --> 00:20:23.200
So our founder says that it's for eternity.
00:20:23.279 --> 00:20:24.319
So there you have it, right?
00:20:24.400 --> 00:20:25.200
Very modestly.
00:20:25.440 --> 00:20:26.720
Yeah, yeah, absolutely.
00:20:26.880 --> 00:20:35.519
So I want to talk a little bit more about the the owning those reels and especially markets that maybe uh for a lot of companies are still out of reach.
00:20:35.759 --> 00:20:49.759
Um, when we look at the map, sort of like on a global scale, you see that a lot of the biggest flows in the world are going through, of course, the United States, China, India, Brazil, um, and but a lot of those flows are still going to partner banks.
00:20:49.920 --> 00:21:00.799
Um, so if I would ask you, does banking circle now realistically already sit on those reels, or is that something that you're looking to build out in the next couple of years?
00:21:01.039 --> 00:21:05.359
Yeah, so we need to build out further, without doubt.
00:21:05.680 --> 00:21:08.960
We haven't provided sort of an end state.
00:21:09.119 --> 00:21:15.359
This is where we are gonna end up in terms of the clearing capabilities when it comes to too flat.
00:21:15.519 --> 00:21:21.519
But you mentioned a number of markets that we have looked at and we will look at again.
00:21:21.759 --> 00:21:30.160
I think we have a very good sort of almost pipeline for the next couple of years, but we need to think about then what?
00:21:30.400 --> 00:21:30.559
Yeah.
00:21:30.720 --> 00:21:33.200
And after that time period, we need to start now.
00:21:33.440 --> 00:21:41.680
So that's why in a couple of weeks we are actually sitting and having this big strategy, global expansion, so right, and that's really what's next.
00:21:41.839 --> 00:21:46.480
But you know, the premise is really we want to self-clear all the major currencies.
00:21:46.640 --> 00:21:50.880
Then you can say is it the major 15, major 20, major 25, right?
00:21:50.960 --> 00:21:53.440
And it's somewhere in between there.
00:21:53.759 --> 00:21:59.839
And then in some cases, it might be so painful getting our own wealth that we'll rely on correspondent banks.
00:22:00.240 --> 00:22:00.880
Yeah.
00:22:01.920 --> 00:22:04.640
But that's got to be sort of unique cases, right?
00:22:04.720 --> 00:22:09.200
So that's really, and then we are building our stablecoin well as well.
00:22:09.279 --> 00:22:10.640
We got our casp license, right?
00:22:10.720 --> 00:22:13.440
So we have leaned in heavily on digital assets.
00:22:13.839 --> 00:22:18.799
Uh, and we got our cash license in the bank, so license in Luxembourg.
00:22:18.880 --> 00:22:24.480
So now we can do meekly compliant uh stable coins on and off-ramp, uh, which is a big thing.
00:22:24.640 --> 00:22:31.680
We are gonna expand that and we are gonna build out the capabilities, and we have a very clear roadmap for that.
00:22:31.839 --> 00:22:36.799
And the way we see stablecoin is really as another payment rail, if you will.
00:22:36.880 --> 00:22:38.160
It's another mechanism, right?
00:22:38.240 --> 00:22:45.359
So if you sit on stablecoin, then okay, you want to actually off-ramp it and get checked for UNA, we can do it instantly.
00:22:45.599 --> 00:22:48.079
24, 7365 days.
00:22:48.720 --> 00:22:59.279
And that's the power of having having sort of our digital asset strategy side by side with our Fiat capabilities, and it's on one single API, right?
00:22:59.440 --> 00:23:03.359
There was always we built digital asset, it's on the API, period.
00:23:03.759 --> 00:23:05.920
Uh, so that can be incredibly powerful.
00:23:06.240 --> 00:23:19.680
Absolutely, because especially the the conversation around stable coins, I'm having probably way too much at this moment, but uh there's trillions of dollars, I think over 30 trillion dollars per year in in stable coin volume.
00:23:19.839 --> 00:23:22.400
But a lot of that is attributed to trading, right?
00:23:22.559 --> 00:23:25.039
Markets going in and out of decisions of of crypto.
00:23:25.200 --> 00:23:31.440
And but there's a growing part of that that's actually about uh payments processing uh and doing that.
00:23:31.599 --> 00:23:43.440
So where do you when when again we when you focus on when you become a stablecoin issuer and you're doing on-ramp and off-ramp, how does that sit next to the fiat processing that you do?
00:23:43.519 --> 00:23:48.480
Do you think it will replace it, or do you again think it's a a a complement to that?
00:23:48.640 --> 00:23:48.960
Yeah.
00:23:49.119 --> 00:23:53.440
No, so so there's everybody will have an opinion about that.
00:23:53.519 --> 00:24:03.920
I think our position, which I share, but it's also a banking circle position, is there's a clear use case and space for both fiat and stablecoin side by side.
00:24:04.160 --> 00:24:16.799
And again, earlier today I had a meeting with a quite forward-leaning company that everything they do in treasury already is actually stablecoin in terms of how they manage liquidity and it's it's that which is very smart.
00:24:16.960 --> 00:24:25.119
And then you have it sort of as payment and just moving money, but it's also how do you run operationally and sort of truly instant, right?
00:24:25.359 --> 00:24:33.839
So that's uh that that are definitely those use cases, but it doesn't take, in our view, the need for fiat and actually uh having that.
00:24:34.000 --> 00:24:39.519
So again, we see it as another very important sort of mechanism, if you will.
00:24:39.599 --> 00:24:44.640
I don't want to call it payment mechanism because it's much more than that, that sit next to the fiat.
00:24:45.039 --> 00:25:04.880
Uh and and we think also when you look at sort of maybe some of the more exotic currencies, that stable coin will play a big role and maybe replacing part of that flow, even more than sort of some of the Western European or sort of Western uh uh currencies.
00:25:05.039 --> 00:25:06.240
So we'll see.
00:25:06.319 --> 00:25:14.720
I think it's gonna be sort of two slightly different worlds, but a very clear use case in both worlds for stablecoin and fiat.
00:25:14.960 --> 00:25:19.519
But it might just be slightly different weighted depending on sort of where end of all it is.
00:25:19.839 --> 00:25:20.480
Absolutely.
00:25:20.720 --> 00:25:22.720
So I hear a lot of different things, right?
00:25:22.880 --> 00:25:29.279
It's having licenses, owning the entire network, um, stable coins, of course.
00:25:29.519 --> 00:25:37.359
That's a massive investment, not just in capital, but also in a lot of the time spent just to get those licenses to build everything out.
00:25:37.599 --> 00:25:43.680
Why do you think that's a better strategy than just partnering up with other banks and just moving on?
00:25:43.759 --> 00:25:49.920
Just quick to market, go into as many markets as possible versus putting all those years and all of that investment in there.
00:25:50.160 --> 00:25:54.160
Well, I I think you're only gonna solve part of the issue, right?
00:25:54.240 --> 00:26:04.559
So almost the front end and yes, you could do a single API, yes, you could do a better onboarding that's traditional banks, but you'll go half the way.
00:26:04.720 --> 00:26:06.559
Operationally, it's very different.
00:26:06.720 --> 00:26:17.519
The instant capability and truly instant would you would not be able to achieve it in the same way through partner banks, at least sort of to the scale we are trying to do in the breadth.
00:26:17.680 --> 00:26:21.119
Um, and then frankly, listen, there's a cost element to it, right?
00:26:21.279 --> 00:26:36.960
With with the legacy banks, uh the cost for your sort of per payment, and they don't look quite at it, but the huge machinery that have been created on the back of that, it's it's very much driven with sort of human capital rather than actually built the technology.
00:26:37.200 --> 00:26:46.720
So I think sort of it it would almost erode at least sort of the full vision of what our founders haven't go all the way.
00:26:46.880 --> 00:26:54.000
But you're right, sometimes a regulatory process and actually getting into a sort of market or a particular currency, it is.
00:26:54.640 --> 00:26:55.920
And it is, right?
00:26:56.079 --> 00:27:00.160
Sometimes it's better than that, but it's not quick.
00:27:00.480 --> 00:27:08.160
But I think if you look at sort of what we have now and what's coming, so by end of the year, we would have filled in Europe, yeah.
00:27:08.240 --> 00:27:10.000
Is I except for Romania.
00:27:10.640 --> 00:27:11.839
Europe is done.
00:27:12.079 --> 00:27:16.160
And then Asia, we have great tribes, we already have some, but that's gonna come.
00:27:16.480 --> 00:27:17.759
Canada will come.
00:27:18.000 --> 00:27:25.519
Uh so these are sort of probably all 12, 18 months out, everything I mentioned, right?
00:27:25.680 --> 00:27:26.960
And then we need to do more long.
00:27:27.279 --> 00:27:32.480
So we're already far along that curve, and we have built the expertise.
00:27:32.799 --> 00:27:37.200
And we don't stand still and say, okay, then we wait for that, or we wait for that.
00:27:37.359 --> 00:27:38.720
We keep going, right?
00:27:38.799 --> 00:27:41.839
And and so we have a very good team uh doing that.
00:27:42.000 --> 00:27:55.759
So it would be a pity if we started to dilute their original vision because you would only go halfway and it wouldn't be truly instant, at least consistently, it would be more expensive, it's not gonna be the same operational experience, all that.
00:27:55.920 --> 00:28:01.279
So, you know, personally, I'm I'm excited, but the founders sort of set up and what they've done so far.
00:28:01.599 --> 00:28:03.759
Uh, I think our clients are excited as well.
00:28:03.839 --> 00:28:05.920
And I think that's where we really differentiate ourselves.
00:28:06.000 --> 00:28:07.279
If we had gone half the way.
00:28:07.519 --> 00:28:08.160
Yeah.
00:28:08.480 --> 00:28:09.839
Yeah, yeah, absolutely.
00:28:10.000 --> 00:28:18.000
And I think if you look at the market right now, there's been some some large acquisitions, of course, of uh like MasterCard has acquired BVNK.
00:28:18.240 --> 00:28:22.000
Um, we've seen global payments and world pay getting together.
00:28:22.079 --> 00:28:24.319
So there's a lot of movement within the market.
00:28:24.480 --> 00:28:36.000
Um, originally, of course, the the the story behind uh banking circles that it was a spin-off and then later on uh uh acquired or at least invested heavily into by uh EQT.
00:28:36.319 --> 00:28:39.119
Um what does the future for you guys look like?
00:28:39.359 --> 00:28:46.640
Is that something where, again, you did an acquisition in Australia, which much more uh uh was one of the few exceptions?
00:28:46.960 --> 00:28:56.240
Is it to continue to go on that growth path of continue to grow where your customers are growing, getting into those licenses, or do you see another strategy that could play out?
00:28:56.480 --> 00:29:01.279
Well, I I I think it is really following our client base and clearly expand our client base.
00:29:01.759 --> 00:29:11.039
And there are sort of some verticals we are looking at, and because if you look at the product and the capability we have created, there are so many use cases.
00:29:11.279 --> 00:29:16.720
So we are looking to sort of expand some of the verticals in terms of clients, uh, certainly.
00:29:16.880 --> 00:29:21.759
And then as you say, we are rolling out the global capabilities with the digital assets.
00:29:22.000 --> 00:29:26.000
But you know, I wouldn't expect us to do sort of a massive pivot.
00:29:26.160 --> 00:29:31.920
Clearly, we adjust to the market environment, to what competitors do, what the clients want.
00:29:32.079 --> 00:29:38.720
So I don't want to say, oh, this is never gonna happen, but I see it as very much an organic story for us.
00:29:39.119 --> 00:29:46.559
Uh we are, we broke sort of the profitability point about three years ago, maybe 33, 36 months ago.
00:29:46.640 --> 00:29:48.400
Uh, that was sort of the first month.
00:29:48.640 --> 00:29:57.759
And now, because of just the growth and how we invested earn on planform, very scalable, great operating leverage, we are very profitable, right?
00:29:58.000 --> 00:30:03.599
So we have plenty of sort of growth capital and to invest, it's that's not really the constraint.
00:30:03.680 --> 00:30:09.599
It's more doing it sort of as quickly as we can, but very sustainable and in the right way.
00:30:09.839 --> 00:30:13.759
Now, with Australia, there was a unique opportunity to acquire, right?
00:30:13.839 --> 00:30:17.599
And Australia is a very interesting market, an underserved market.
00:30:18.480 --> 00:30:21.039
Would we do that again elsewhere?
00:30:21.279 --> 00:30:24.640
Never say never, but it would need to be really unique, right?
00:30:24.720 --> 00:30:28.799
And that's sort of so it's not gonna be sort of the core of our path, if you will.
00:30:29.279 --> 00:30:29.839
Got it.
00:30:30.079 --> 00:30:37.440
So I tend to be a very future-focused person, very upbeat, always very optimistic about the future.
00:30:37.599 --> 00:30:40.960
Um, however, sometimes we we we deal with roadblocks.
00:30:41.119 --> 00:30:57.599
So I like to ask my guest, if there's something that you can change right now or that you could eliminate, or something that desperately needs to change in our industry or in your industry specifically, like for instance, does regulation need to be easier or um does it need to be easier to move money across the world?
00:30:57.759 --> 00:31:05.680
What would that be for you and especially for for banking circle to you know help even more of your clients and continue that growth?
00:31:06.160 --> 00:31:07.359
That that's a great question.
00:31:07.519 --> 00:31:13.279
And I'm I'm sort of uh as you ask the question, I'm thinking because I want to give a very honest personal answer.
00:31:13.359 --> 00:31:15.359
I don't want to offend anyone either, right?
00:31:15.440 --> 00:31:18.319
Because as you I try to be positive and optimistic.
00:31:18.480 --> 00:31:31.680
So it's that's sort of so no, I listen, I think um and it does vary, but the policy and the policy making is incredibly slow.
00:31:31.839 --> 00:31:37.839
And it also impacts the regulators, sorry, some regulators and the speed.
00:31:38.079 --> 00:31:44.640
I must say some regulators are incredibly minded to the future, right?
00:31:44.720 --> 00:31:56.559
And we have some great examples and great interactions where they're really strategic, think about where they want to get to for the next decades, and really drive that.
00:31:57.440 --> 00:32:10.400
Other places, and I think the EU is a good example where the sort of the policies and what you want and what you need and facilitate that, it's desperately slow, right?
00:32:10.480 --> 00:32:12.880
Uh and that's maybe by design.
00:32:13.279 --> 00:32:17.519
So I would say that's the biggest sort of friction point in general.
00:32:17.680 --> 00:32:22.319
But I also want to say some places it's actually really, really strong.
00:32:22.400 --> 00:32:29.680
And I think many other places can learn from those few places that actually do it incredibly well from a policy and regulatory.
00:32:30.000 --> 00:32:36.480
I know it's two separate things, but I don't want to differentiate particularly because they do go a little bit hand in hand.
00:32:36.720 --> 00:32:37.279
Absolutely.
00:32:37.440 --> 00:32:42.400
Well, I want to thank you very much for joining us here at Executive Conversations and hope to see you soon.
00:32:42.559 --> 00:32:44.240
After this, thank you very much, Fame.
00:32:44.720 --> 00:32:48.880
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