Interviewed Company Paylinko
Interview with Gabriele Musella
Interview: Tuesday 4th July 2017:
Subjects: Brexit Disruption, Fintech, Education, FCA Sandbox
An extract from the interview and analysis of Paylinko; a fintech startup in the payment space “bringing the power of blockchain to micro businesses in the UK.”
By using a Blockchain system to deliver their service through the IBM Hyperledger platform, they are providing a payment service for micro businesses in the UK, although they are likely to spread beyond the UK in a year. Moving payment systems into new geographies can have regulatory implications as well as technical, practical, and linguistic ones, hence they are UK focused.
“Paylinko bridges the gap to enable more effective and efficient micro business payments.” By removing the intermediaries they ensure a faster cash flow and support small companies, which make up more than “50% of the UK market.” They have refined the user experience into three steps. Create a link, send the link to the customer and get paid.
Gabriele, Paylinko’s founder, has been based in London for the past 7 years and Brexit disruption has yet to phase him or his company. When questioned about Brexit, Gabriele confidently says that the impact of the referendum result has yet to touch Paylinko. The only impact that he can foresee, is the possible implications regarding talent recruitment. If Paylinko is UK focused it will experience a lower Brexit impact than companies endeavouring to establish and maintain client relations in mainland EU. However, as they scale they are likely to encounter the now familiar ‘talent shortage’ that is becoming impactful to the sector as a whole.
Paylinko’s team of 5 contains only one British national, so given the international breadth of the company, there could be a “shortage of talent” due to VISA issues in the future. “We work with a lot of top academic institutions” Paylinko are addressing the future recruitment problem by getting in front of it. Universities are a source of very mixed talent. Within every University there are individuals with interdisciplinary skill sets, “Internationally, some universities actually teach blockchain in the form of workshops”. The complexity within the situation is finding these individuals. There is no established mechanism for this. Small dynamic creative startups like Paylinko have a better adaptive ability to find these suitably talented individuals through individualistic and creative means than do the more formalised and systemically clunky larger companies and organisations. Gabriele is well established as a mentor for Google Launchpad. By working with universities they hope steer clear of any tech skills shortage. Infact, Gabriele speaks about, “almost continuous recruitment” which is the reality for most tech companies.
In fact, six months ago Paylinko “had to let one co-founder go…due to VISA complications” (She was American) and Gabriele is concerned that Brexit may influence more similar situations. Understandable. VISA complications are dangerous to startups with a vulnerable founding team.
It is reassuring Paylinko have survived this setback. In some instances it may be that the geographical spread of the founding team is advantageous and may result in a more de-centralised company structure (yes like a blockchain) in the long run. ‘If the talent doesn’t come to the company, the company must go to the talent’.
With his international team and potential talent recruitment problems, Fintnews asked Gabriele if he would ever consider moving away from London? After 7 years Gabriele has made London – the Fintech centre of Europe – his home. As a result, a HQ move is unlikely, yet with future expansion the creation of offices in a more tax friendly country such as Estonia isn’t off the cards just yet… Estonia has a particularly advanced technology culture including digital identities.
Gabriele describes Paylinko as a “FinteX company” (instead of Fintech) and notes that at a customer relationship level, that’s when they start competing with the banks. Paylinko, provides customers with a “more professional user experience…other startups are just looking at back-end tech solutions”. Paylinko focus on the whole FINancial TEchnology eXperience. This suggests a more disruptive and ‘aggressive’ approach to the market.
This suggests a more disruptive and ‘aggressive’ approach to the market.
In the 2014/2015, in the fintech ecosystem there were many startup companies looking to actively compete against the banks and established industry incumbents. This period of competition gave way to a period of collaboration and cooperation, as incumbents realised the necessity of partnering with startups in order to avoid disruptive competition, not just from the startups themselves, but from other incumbents that had already started to capitalise on the new wave of fintech innovations.
In 2017 the tendency is for fintech startups to provide some sort of ‘utilitarian back-end system and efficiency’ service for larger companies rather than a whole customer experience aimed to a head to head competition with them.
Fintnews: So, why has Paylinko’s business model been so disruptive? “Paylinko makes a card transaction, that can become very complicated with jargon, very simple. For example, a plumber could send their client a link to make a payment for the work that they have just carried out.” A seamless User experience has been engineered into the entire Paylinko system. Features that will soon be launched include the ability for users to receive “payments in a matter of seconds.”
Gabriele insistent with his message that cashflow is such an important aspect in allowing small companies and sole traders to operate without hesitation. Paylinko’s aim is to provide an all round service, facilitating: pre-sale, point of sale, post-sale and payment tracking capabilities. Without a doubt, Paylinko’s primary audience of micro businesses are especially welcoming of their solution to facilitate a faster cash flow. Cashflow facilitation is the basis of the service here. The enabling of a simple, user friendly method of sending payment requests is the first stage. Secondary to this is factoring, invoice discounting, loans, other credit facilities that address the same problem, cashflow.
Paylinko think that the retail market will change a lot in the near future thanks to emerging technology like DLT/Blockchain. How consumers behave with certain products, for example a car, and then how that consumer history is saved on the blockchain. This “transparent user history” has the potential to be used by insurance companies and lending companies to make smarter, more informed decisions in the future. A reasonable supposition. The replacement of internal combustion engine vehicles with electric vehicles greatly facilitates the automation of consumer transport. ‘Transparent User History’ or indeed just ‘User History’ automatically documented into a blockchain, Distributed Ledger Technology, or other storage retrieval mechanism may be one component in an integrated supply and servicing line, not just for cars, but for all things. the end game is E2E, everything to everything. Total integration.
“The government and Fintech need to work together more.” Paylinko have recently been chosen to take part in the FCA Regulatory Sandbox programme, which is set to begin towards the end of this year. This provides Paylinko with ‘real data’ and access to scale up versions of that data whilst operating with a controlled and ‘pre-market’ environment. By working with the Government already, Paylinko will continue to reap the benefits that this positive reputational value brings.
Fintnews: Is there anything else that you would like to add? “We are fundraising.”
Read the interview and analysis in full in The Fintech Times in print this July.