While Brexit deliberations remain the overbearing concern for the financial services industry BBVA-backed fintech Denizen is attempting to calm those nerves by looking at maintaining that today’s markets are international in nature, transgressing the political arena.
“We’re all inhabitants of this world. Our finances and banking should operate on that same global stage. Denizen is aspirational in that we are building a single, global banking solution,” Co-founder and CEO of Denizen, Joaquin Ayuso recently told bobsguide.
It is a grand aspiration, flying in the face of politics but fitting into a much broader trend of closer cross-border movements in the fintech space.
A recent report by CBI, satirically called ‘Smooth Operations’ considers the complexity of aligning rules and regulations in a post-Brexit world. The report claims that the UK’s financial sector has a £25bn trade surplus with the EU, accounting for 36% of the country’s total exports.
The CBI report calls for a mirrored approach, more or less echoing future European financial regulations. The report further concludes that the problems will come when UK regulators look to move away from EU regulatory principles.
Mark Carney has advised firms to begin their plans, but still there are many questions remaining unanswered. The issue of passporting and reapplying for banking licences, for instance, could be a whole new can of worms if the UK fails to ‘do a Norway’ and retain access to the single market.
But Denizen’s Ayuso has suggested that Brexit is also a cause for opportunity.
“I was working in payments [in Santa Monica, CA] and, as a Spanish expat living in the US, I had first hand experience of the challenges of managing finances between two countries. In my research, I realized the enormous size of this market demand and how a solution for expats could be expanded to fit the needs of a larger global population.”, said Ayuso.
Cross-border payments is a gap poorly served and frustrated by existing companies and exacerbated by the growing political, and similarly, regulatory disunity, leading to Ayuso commenting that it was “an archaic system”.
“Finance has always operated as a closed border. Even within the European Union and within free trade zones around the world, the flow of money stops once it reaches a border, a new currency or a different financial institution.” Said Ayuso.
Cross-border payments is by no means a new market, but Ayuso made an important distinction between Denizen and firms that simply offer wire transfers. “These companies seek to make it easier and less costly than traditional banks. But you’re still left with a service that is more stressful and costly than it needs to be.”
“Denizen overcomes these barriers and enables the people that choose to live their lives outside of borders with financials that do the same.” Said Ayuso.
But overcoming the regulatory hurdles has been no easy task and required intervention from an incumbent firmly embedded in the European banking landscape.
“BBVA has been a great partner in helping us to overcome this, and we are already one of the first examples of open banking standards in Europe. We’re working country by country to resolve this and plan to have ten more countries live by this summer.”
And BBVA were equally enthused about the bright prospects the former CTO of Tuenti - dubbed the Spanish Facebook - could bring.
“Denizen solves a very significant problem for more than 50 million expats and 250 million migrants,” Ian Ormerod, General Manager of New Digital Businesses at BBVA told bobsguide “The service is set to expand in 2018, adding as many as ten top European Union countries in the second half of the year as well as the United Kingdom. Denizen will also continue to expand its product lineup with new credit and banking solutions.”
What that expanding lineup of new credit and banking solutions could be is yet to be seen, but when asked if Denizen would take the plunge into correspondent banking, as Ripple has done, Ayuso was bullish. “We are on a mission to transform global banking. We launched within the consumer vertical, but are exploring other possible rollouts in the future.”
“But we are fanatical about quality, so wherever we launch, it will be deliberate and with a commitment to set the global standard in that space”.