PIF Summit 2017 keynote interview: Suresh Vaghjiani, GPS

Prepaid International Forum (PIF) recently interviewed Suresh Vaghjiani, MD of Global Processing Services (GPS), about the current state of the fintech sector.

From the rapid growth of new entrants and their impact on the prepaid sector to working with an abundance of new players as the industry strives to bring more choice, greater security and better resilience to the sector.

When we look at fintechs with prepaid at the hub, do you think consumers understand what prepaid is? Do they get it or are they just concerned with how the product works?

It’s not about prepaid, it’s about the user experience. The average consumer just wants a product that comes with the added features fintech can offer, simple things such as retrieving your PIN from your app, multi-currency solutions and live notifications. Traditional providers are struggling to do things like this.

The sector is growing so quickly that it will take the incumbent banks two years or more to catch up by which time the products will be outdated. New entrants are getting products to the market very quickly and they are providing better value and better services. Fintechs are delivering the enhanced user-experience that consumers buy into and develop rapidly based on behavior driven development.

Some fintechs have failed and this has led to some investors pulling back. We saw a dip in innovation for a period of time but in the last 8 months we’ve seen an acceleration. What do you think is driving all of this?

We can see a fair amount of defensive play, where traditional providers are snapping up companies for fear of the market moving on without them. They want to be part of it and they are acquiring companies to learn from them.

And then there is the widely held view that some valuations are excessive, especially when products could be launched for half the cost. The real valuations are based on the number of the customers they have, the user experience and ultimately the problem the product will solve such as the ability to send money around the world in a certain way. But there are providers of similar products getting vastly different valuations.

I think that there will be a few casualties in the fintech space. The casualties will be the ones who try to copy products that are already available. The people who are copying solutions are almost killing our identity and I think these copy-cats will struggle.

The elephant in the room is revenue. Many companies aren’t making any money despite their high valuations. I wonder how that can be justified. The way these solutions have been sold to investors varies considerably. For example, some are looking to commercialise their business model by selling value-added services such as travel insurance and using data to push service providers, such as utility companies, who can undercut a consumer’s current provider. You need to look at how a solution has been sold to an investor. Ultimately these companies are valued on how they use big data to provide added services that end customers really value and desire.

Can you tell us about GPS and its journey?

GPS didn’t enter the market as a processor. We began as a programme manager specialising in open and restricted loop gift cards such as shopping mall cards that run on scheme rails. We still process the Westfield Gift Card today. In the beginning we used a third-party processor. But we soon felt that we could do a better job by processing for our own programme. We thought that it would be an easy process but it certainly wasn’t!

The most striking learning in this process was that we built the GPS platform not as a processor but as a programme manager. As a result, we created a platform that was very rich in APIs. We have pages and pages of APIs that do different things, from PIN reminders to Luncheon Vouchers configured to only work at certain times of the day. You only need to look at our clients to see just how diverse the GPS platform is.

Having a processing platform is not financially viable unless you are processing millions of transactions a day, so GPS was formed as a separate company with separate resources and staff. When I joined GPS three years ago we had 40 members of staff. This has grown to over 140 today.

GPS has grown very quickly and has become one of the key processors in the prepaid industry. What are your learnings from this rapid growth from a standing start to a key provider of services?

Historically, GPS has been lucky to attribute its growth to word of mouth and client recommendations. This is because we quickly learnt that you have to employ the right people in the right place to attain exceptional results.

Our success is down to our staff and our attitude. For example, we have tried to learn from our competitors by looking at what we like and doing it better and looking at what we like less and doing it differently. As an example, we insist that all our account managers must have completed a least one year of implementation work before they can become an account manager. This may sound simple but it means that they have the technical knowledge to address things rather than act as glorified mail box.

You have over 100 clients globally, what are the challenges of working with them?

We have been very fortunate that to date no clients have chosen to leave us as a service provider. We pride ourselves on the power and flexibility of our processing platform GPS Apex, which is harnessed by our team of payments engineers to optimise each individual programme. Each programme comes with its individual challenges and our aim is to collaborate with each client to ensure any issues are efficiently and rapidly solved.

Comparisons are often drawn with credit and debit cards – that they always work, that transactions always go through. But this ignores the fact that prepaid processing is far more complex. Unlike standard processing for credit and debit, prepaid prohibits negative balances.

GPS has a great story to tell. We are pushing boundaries and we are doing things that no one else has done before. We have clients who are using our technology to deploy first-of-its-kind products and services but you may not know that GPS is behind it all.

The market is made up of lots of new entrants so it is very important that we can communicate our success stories and how our relationships with our partners and the press work.

What advice do you have for start-ups?

Don’t try to copy someone else! Have a product that solves a problem. I have heard some crazy ideas but if you have something that solves a problem that people face every day then it will grow.

Whether we love it or loath it, the fintech industry has made our sector more mainstream because their solutions appeal to the mass market. I have never seen so many prepaid cards being used on the London Underground. And that’s not because they’re being sold as a prepaid proposition, it’s because they’re being sold as a solution.

Keep pushing the boundaries and question everything, but don’t break the rules or the whole sector will suffer!

TSB Bank awards five-year services contract to NCR

NCR Corporation has signed a five-year deal with UK’s TSB Bank to look after the bank’s 900+ ATMs and IDMs as well as provide service desk support for its employees across its branch network, writes Banking Technology (Paybefore‘s sister publication).

TSB’s ATM network consists of ATMs provided by NCR as well as other vendors.

The contract covers remote ATM monitoring, incident management and help desk support for TSB’s branch partners, and second line maintenance 24×7. NCR will manage the service performance and provide reporting and deep dive analytics on all incidents and service calls.

TSB, formerly part of the Lloyds TSB group, is still heavily dependent on Lloyds’ technology environment, but is gradually moving away from it. As part of this transitioning, TSB was looking to renew its services contract.

The bank visited NCR’s services operations centre in Belgrade, Serbia, and “was impressed with the skills of the team, their energy, the language capabilities and dedication as well as high service-level results”, NCR says.

“Combined with NCR’s services team in the UK, NCR convinced TSB Bank that NCR was the right partner to help them in their transformation process,” the vendor adds.

Farewell Lloyds, hello Sabadell

TSB was purchased by a Spanish banking group, Sabadell, in 2015. TSB is in the process of implementing a new core solution – Proteo – Sabadell’s proprietary system. The platform, which will replace the Lloyds one, is expected to cut costs by £160 million annually, according to TSB and Sabadell. Go-live is anticipated some time in 2018, it is understood.

The £1.7 billion TSB sale agreement between Lloyds and Sabadell included the former providing £450 million towards IT integration costs.

Mike Corran, TSB procurement and property director, says the bank’s move to the new platform “will make us more responsive, agile and innovative”.

Circle centres itself for digitally connected wallets

Payments services provider Circle has introduced Centre, an open source project built on blockchain and designed to connect multiple digital wallets to process money transactions, writes Banking Technology (Paybefore‘s sister publication).

The idea behind Centre is to “streamline” the transaction process regardless of the currency used. By utilising the rise of cryptocurrencies, Centre says it will allow money to flow between digital wallets, much in the same way HTTPS, SMTP and SIP information goes between web browsers, email and text messages.

Besides just using the Circle pay app, the firm says one such scenario is a user sending money to someone in China who uses Wechat Pay, who can then pay someone who uses PayPal in the UK. It couldn’t be done before, but now Circle plans to change that.

Payments are facilitated using the company’s Centre tokens (CENT). It won’t come at a cost to customers and instead of being based on cryptocurrencies it will be fiat money instead. This is to maintain a decentralised and open source based blockchain.

Jeremy Allaire and Sean Neville, co-founders of Circle, say: “Centre is bootstrapped by contributions of internal software Circle has used for the past few years to connect payment systems from blockchains to card networks to ACH to SEPA, along with services for identity, risk, compliance, and currency exchange.”

Crossing borders

Back in June 2017, Circle began to offer its customers in the US, UK and Europe the ability to send and receive money across borders with no fees and no mark-up on foreign exchange (FX) rates.

Since the service has introduced a range of product updates. Including receiving payments into bank accounts in the UK via Faster Payments and same day withdrawals into most European bank accounts via SEPA withdrawal.

Last month, Marieke Flament, European MD at Circle, discussed how technology is transforming the global payments landscape.

Obsidian and Arroweye reward consumers for shopping local with prepaid cards

Obsidian, a Colorado-based organisation that encourages consumers to shop local in their home community, has selected Arroweye Solutions for its Local First Card programme, writes Banking Technology (Paybefore‘s sister publication).

Obsidian will use Arroweye’s Digital On-Demand card production platform to produce private-label, open-loop prepaid cards. Personalised cards can be “in customers’ hands in as little as 48 hours”, Arroweye says.

The Obsidian Local First open-loop prepaid card programme is active within local communities and business affiliates across the US. It aims to support and help local independent businesses leverage reward programmes, automate loyalty and carry out marketing projects.

“Each Local First card is a fully-customised programme that allows consumers to get deals, earn points and give back to their local community,” says Travis Priest, Obsidian CEO.

“Arroweye’s Digital On-Demand solution is the only card production method that allows Obsidian to offer a turnkey programme and deliver an infinite number of custom cards for any community at any time,” according to Priest.

Render Dahiya, the company’s CEO, says its technology is “unmatched in the industry”.

“It gives organisations access to an unlimited number of dynamic imaging and messaging options for cards and carriers, while eliminating the hassle and cost of perishable inventory,” Dahiya explains.

Wells Fargo launches mobile “tap and pay” functionality at 5,000 ATMs

More than 5,000 ATMs of Wells Fargo (40% of its ATM network) now have near-field communication (NFC) enabled mobile wallet capability – i.e. the bank’s debit card customers can now “tap and pay”, reports Banking Technology (Paybefore‘s sister publication).

The bank says it aims to upgrade the rest of the ATM network by 2019.

Customers can already access any Wells Fargo ATM without a physical card by generating a one-time access code through their mobile banking app. Wells Fargo points out that with the launch of the one-time access code in March 2017, it became “the first large bank in the US with an entire fleet of card-free ATMs”. Nearly three million card-free ATM access code transactions have been carried out since then, according to the bank’s data.

Now, a customer can initiate an ATM transaction by signing into a range of mobile wallets: Wells Fargo Wallet for Android, Apple Pay, Android Pay or Samsung Pay.

They simply hold their smartphone or wearable device near the terminal, input their PIN and the transaction is completed.