The disruptive power of Fintech in the Banking industry. An interview with Philippe Gelis*

Reading time: 6 minutes

22 Lug
Foto del profilo di Guia Beatrice Pirotti

by Guia Pirotti

SDA Professor of Strategic and Entrepreneurial Management

“We believe that it is time to make a change in the financial services industry. Technological innovation and efficiency are and will continue to be the vehicles for this change”, Philip Gelis, Kantox

Foto GelisTo Marc Andreessen’s famous statement, “software is eating the world,” Richard Branson, founder of the Virgin Group, added “and financial services are no exception”. The speed of technology and market changes are forcing financial services to adapt faster and more efficiently than ever before. Most financial services firms understand that digitization is part of their business. Large powerful corporations as well as “lean-and-mean” start-ups are entering the financial services industry. Industry reports estimate that over 4000 start-ups are ready for the market. Their goal is to revolutionize this conservative industry and gain significant market share.

Kantox is a Fintech company, founded in 2011. It offers a marketplace for SMEs to exchange currency, including peer-to-peer, enabling them to get a better exchange rate than the one offered by banks or traditional brokers. Kantox now serves more than 1.500 corporate clients, ranging from small businesses to mid-cap companies. The company employs 55 staff across its London and Barcelona offices.
In this interview, Philippe Gelis co-founder of Kantox, describes the main forces that potentially lead to what he calls "marketplace banking" - the worst case scenario or, in other words, the end of many banks that have not started to cooperate with Fintech start-ups yet.

Mr. Gelis, what is your professional background? How did you come up with the idea of creating Kantox?

I am from the south of France. I studied at the Toulouse Business School where I gained a Master in Business Administration. From 2007, I worked as a strategy consultant for many consulting firms including Deloitte. When I were at Deloitte, one of my clients was exposed to a foreign exchange deal. With my co-founder, we tried to help him negotiate with banks, but we soon realised that the negotiation was expensive and complex for a mid-sized firm with no access to live rates. We identified a gap in the market. We identified an opportunity for launching a business. Large companies have resources and knowledge to negotiate fair and transparent prices with banks. Differently, SMEs are unable or in trouble to do so.

How does Kantox work?

currencyWe offer SMEs a cost-effective and transparent alternative to trade with banks and brokers. For example, if you were a company located in Europe, importing from China and paying your Chinese provider in US dollars, our marketplace would enable you to find another company, located in Europe, exporting to the US who has dollars to sell in exchange for your euros. Kantox was born from the idea of disintermediating banks and brokers involved in the foreign exchange process, decreasing efforts and costs for companies. Instead of trading through a bank or broker, with Kantox, two trusted companies trade with each other directly, in a peer-to-peer manner. The Kantox platform gives clients the live mid-market rate updated in real time, ensuring clients that, as long as they are matched with a peer company, they will receive the mid-market rate on their trade.

Which are the main advantages for SMEs?

We offer full transparency of prices and very good prices. Then, we offer a completely online solution. With many banks, you need to call to trade. We offer a simple platform with many features. We have a software that is able to manage everything. For example, we give some alerts to our clients; we create the connection between two clients’ platforms. We want to offer a completely automated and intuitive service. We are evolving more and more towards a complete solution. We obtained great results in a short time. Our strength is executing, executing, executing. We need to be very fast and efficient.

What about your investors? Which role do they have?

In 2014, we secured a €6.4 million investment from Partech Ventures, IDinvest Partners, two leading venture capitalist firms, and Cabiedes Partners. Partech Ventures has co-led a new €10MM financing round in Kantox. It is not just a matter of financial support. Partech, for example, carries out a consultative role in our strategic direction. They are really supportive.

How do you see the role of "traditional" financial services in the future? Are they in danger?

Traditional bankIn the future, I see a form of coo-petition with banks. Customers are no longer required to rely on one provider for all their financial needs. They are free to choose among different providers. Financial services firms are still at a crossroad. They have not a clear direction in mind. In some cases, they give awards to the best Fintech companies; in other cases, they implement incubators or accelerators to have an overview of what is happening in the market; sometimes they invest or make partnerships with Fintech firms.

There are two kind of banks. The ones that are smart enough to understand that Fintech companies are here to stay and to change the landscape. They try and they want to collaborate in some way. Then there are the old school ones, not feeling comfortable with innovation. They do not want or try to find a way to collaborate. That kind of banks will probably disappear in the future. Every industry will probably be transformed by the digital revolution, but it seems that most financial services firms still think it will be different in their case. Banks and financial services simply do not understand that tech companies are agile enough to take advantage of any piece of the value chain.

We are living different waves. We are now experimenting the first wave of Fintech. Now companies and start-ups compete with banks on specific products (i.e. loans and credits, payments, foreign exchange). Now financial services firms can react monitoring digital trends and key players in the market, opening incubators/accelerators or creating VC funds to invest in start-ups. We can also imagine a second wave of Fintech, the one that will really disrupt the market – probably in 2-5 years – in which “marketplace banking” (or “Fintech banks”) will be created. Successful Fintech entrepreneurs will have enough credibility, experience and funding to get banking licenses and directly compete with banks on their core business. In that case, financial industry will be under immense pressure.

*I thank Partech Ventures for their collaboration in realizing this interview

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