The foreign exchange (FX) market is the biggest in the world, but as the world came to standstill due to Covid, and we’ve seen a massive drop in travel, the FX market is one of the hardest hit – Travelex for example are facing losses of £368 million after a pre-pack administration of the FX business.
As an expert in the field, Stefan Pajkovic, the chief executive officer at fast-growth fintech TradeCore, has over twenty-five years of experience in building and developing the financial landscape. Stefan has worked for Deutsche Bank, Global Trader, Leanpay and Lykke.
After witnessing what he calls the fintech ‘spiral of death’ – whereby fintechs fail to launch due to the complexity of the sector – Stefan launched the TradeCore platform earlier this year. Partnering with key ecosystem players – including Modulr, TrueLayer and ComplyAdvantage – the platform acts as a one-stop-shop for fintechs looking to launch a new product or service quickly, by reducing time-to-market and handling tricky back-office issues and regulatory hurdles – which can be timely and costly.
Here Stefan discusses the collapse of FX revenue, and how challengers in the FX market can adapt and evolve their services to weather out the storm.
Never before has the world suffered an economic shock of this scale. All at once. The price of shares in the world’s major corporations plunged, and the value of every currency in the world was in turmoil. For example, in March when lockdown hit, the pound fell to its lowest level against the dollar since 1985. And as Covid spread across the globe, it was clear of the risks posed for FX, creating a significant amount of market uncertainty.
But FX has long been the driver or new fintech propositions. Not least with the launch of challenger banks such as Monzo and
With the FX well drying up, at least for the near term, new fintech founders will no doubt now be scratching their heads when it comes to identifying how they can launch and scale quickly.
Fortunately, there are many new areas (and some old), that are ripe for fintech disruption. Working with fintech founders via our platform, which helps them get to market faster, we’ve witnessed a number of new opportunities providing a new area for fintechs to launch or grow into.
Crypto is one of the frontrunners right now. With the news of Bitcoin’s integration onto PayPal’s platform – enabling users to buy, hold and sell cryptocurrency directly from their PayPal account – indicating that this area, while often overlooked due to uncertain fears about its future, should now be taken seriously – and following PayPal’s move, the shift to digital forms of currencies is inevitable and many fintechs will soon follow.
Elsewhere, as consumers begin to look at new avenues to make their money go further, investment apps are jumping into life. These apps, built on giving consumers fairer, easier access to investing in stocks and businesses, are providing a new platform for fintech excellence.
What’s ahead is still so uncertain – despite seeing new developments of a vaccination – and the future of the FX market is still operating with high awareness, and will most likely be for the foreseeable future.
One thing that’s clear is that there is room for growth and expansion for fintechs who operate in FX. By re-focusing and pivoting their business strategy, and collaborating with players within the ecosystem to further their products and services, they will be better positioned to survive and thrive as we look into a post-Covid world.