Nick England, CEO of VFX Financial Plc
VFX Financial PLC (VFX) is a UK based provider delivering Foreign Exchange and regulated payment and remittance services to a wide range of customers. The mix of clients is broadly split into Corporate and HNW and Private Clients. Corporate clients include Fiduciary firms (e.g. Offshore Trustees) as well as a broad range of SME’s.Here Nick England, CEO, talks to Finance Monthly about the company looking forward into 2016
VFX has developed a cluster of sophisticated and proven technologies which have been successfully developed over the last 10 years. This includes the leading browser based eFX platform used by corporates and its proprietary suite of digital remittance service solutions supported by robust payments infra-structure under various brands. More recently VFX has partnered with the Equity Bank Group in East Africa to deliver the world’s first instant account-to-account remittance service under the Equity Direct brand. This service has been expanded to enable payments to mobile money schemes which have proved to be so popular in Africa.
VFX Financial has been around for over 10 years. As CEO, how did you weather the recession, which came very early into the company’s lifetime?
NE: Economic activity was suppressed during the last recession & many SME’s and Corporate Firms were looking to reduce costs where ever they could. VFX was able to capitalise upon this opportunity given the super competitive currency exchange rates that it has always offered. VFX built up a strong book of business based on a compelling commercial offering combined with great customer service. Those customers have continued to benefit from lower cost currency exchange as economic activity has returned to its pre-recession levels.
For many start-ups, only ~5% of their exchanges are peer-to-peer and the rest is via banks as per usual. Is this simply the case of trying to capitalise on recent trends?
SF: First of all, banks play an important role in facilitating peer-to-peer exchanges either directly or indirectly. As in the case of Equity Direct these are facilitated leveraging Equity Bank’s payments infra-structure, which runs wide and runs deep across the East African Community, terminating transactions to accounts on its books in real-time, making payments to accounts at other banks and of course the various mobile money schemes. Equity Bank also provide access to deep pools of local currency liquidity in the region which enables VFX to provide superior exchange rates to our customers.
Banks also facilitate the wholesale settlement of funds that enables cross-border peer-to peer payment schemes to exist but as we have seen in Africa the non-bank sectors that have driven innovation in peer-to-peer payments and financial services.
Countries like Kenya and Tanzania where mobile money and alternative payments schemes have flourished and peer-to-peer exchanges are common and are now embedded in daily life. Cross-border peer-to-peer payments are a reality and there are several ground breaking initiatives that VFX is involved with to energise this.
VFX Financial recently partnered with Equity Bank. What will this partnership enable?
SF: In April 2014, VFX and the Equity Bank Group in Kenya partnered to launch Equity Direct: a real-time, cross border, multi-currency digital money transfer service from the UK to Kenya. The service enables individuals and corporates in the UK to send money to any account at Equity Bank in Kenya, any bank account in Kenya and mobile money schemes.
The service can be conveniently accessed online through a secure portal; www.equitydirect.co.ke . The platform offers super competitive foreign exchange rates with a low transaction fee combined with immediate delivery.
Senders from the UK have a choice of sending money back to Kenya in major world currencies including EUR, GBP and USD as well as Kenyan Shillings. In Q1 next year, Equity Direct will be expanded to Rwanda and Uganda with South Sudan and Tanzania following shortly afterwards. Customers will be able to send money to bank accounts as well as mobile money schemes just as they do in Kenya today. In the words of Dr. James Mwangi, CEO of the Equity Bank Group, “Equity Direct democratizes remittances” and enables people to send money to friends and family at a time of their choosing and at a fair price with immediate delivery and value. This has been recognized by the World Bank Remittance Price Comparison.
Looking forward into 2016, what do you anticipate VFX Financial being involved in?
SF: In addition to the roll-out of Equity Direct, VFX is actively participating in a telco neutral scheme to enable peer-to-peer remittances. The scheme will have global reach, leveraging the technologies that support many of the world’s mobile money schemes. With a single integration, participants will be able to originate and terminate transactions to any other participant within the scheme creating a truly agnostic distribution channel for remittances, payments and mass disbursements. This will herald a new approach to the provision of humanitarian aid support on the ground by financial institutions such as Equity Bank whose mission is to provide financial services to those at the bottom of the pyramid. In fact, we have realised during the course of this journey that there is a pyramid at the bottom of the pyramid. Digital distribution of aid reduces costs by up to 30% as there is no cost of transport or storage. It also provides the recipient of aid with choice, enabling them to buy the things that they need locally as opposed to being provided with physical commodities that have been transported thousands of miles. With digital disbursement of financial aid they are able to source food that they prefer to eat. In Africa some groups prefer to eat maize but others prefer flour.
Once this payments infrastructure is in place, humanitarian agencies can be aligned to what people need rather than what humanitarian organisations are mandated and equipped to provide. Currently, spending is in the region of USD $25 billion per year.
A recent four country study comparing digital payments and food aid found that 18% more people could be assisted at no extra cost if everyone received cash instead of food.
As a result, aid agencies are starting to realise that they need to invest in new approaches to protect the lives and dignity of those affected to ensure aid is spent as efficiently as possible. VFX is collaborating with those who are leading these initiatives.
We are also following the developments in blockchain technology. Whilst we don’t believe that crypto-currencies have a viable future we think the technology does. It is the most heavily invested of all the Fintech sectors.