With more than 30 years of experience in payments and banking, Paul Townsend co-founded Vitesse and serves as the company’s executive chairman. He explains what makes Vitesse an innovative player in the industry and how the London-based fintech is simplifying the cross-border payments space.
Founded in 2013, Vitesse provides cross-border payment services to banks and businesses via a globally distributed settlement network. An FCA-regulated company, Vitesse operates one of the largest domestic banking and payment networks in the world, giving its customers direct access to more than 100 countries’ domestic payment networks, covering 60-plus currencies. The company usually sees payments from more than 100 markets a month via local ACH methods.
“The focus was really about building a network of local banks around the world and payment methods that we can connect into via a treasury platform, and then use that to facilitate cross border platforms for corporates, rather than consumers,” says Townsend. “There’s already quite a lot of consumer-based platforms around, but this one was very much focused on the larger SME and corporate market, in particular things like insurance and payroll.”
The insurance industry
Vitesse currently serves a number of core industry verticals in its operations, with one of the largest being insurance. This focus on the insurance industry was fuelled in part by its previous business Envoy, where it had client relationships and partnerships that have been built on with Vitesse. “Some of these clients asked to use the platform as early adopters. One of the early adopters was a third-party claims handler in India and it had a lot of international requirements that introduced us to the whole market of insurers and claims handlers. We started on one, and then we hired some more people in that sector, and it grew from there through a number of relationships with insurers. Starting with a relatively small base we’ve just expanded into that sector. We’re now working closely with the London insurance market to provide our services across insurers, brokers and DCAs.”
Townsend continues to explain that, when looking at some of Vitesse’s recent achievements, one of the more interesting is these insurer offerings. “Before we were involved insurers tended to have quite manual processes around the flow of funds or the reconciliation of those funds. What we’ve managed to do is automate all of that flow for them by connecting the insurer with all their claims handlers from a payment perspective on our platform, so they can see the payments in real-time and see their balances across all these claims happening in real-time.”
Driving innovation
The speed of payments is something that is often discussed in the fintech industry, particularly with the Faster Payments Service becoming more widely adopted across the industry. For Vitesse, the goal is always to be as fast as possible – “it’s always speed and cost that drive payments”.
“Having our clients being able to pay people within seconds is the golden position you want to be in,” says Townsend. “It’s all about finding how those payment methods can be real-time and that you can tap into. We will always connect to the fastest method we can within a given country, which might vary from instant to a couple of hours.”
Tackling the challenge of regulation
When it comes to the paytech and fintech industries, regulation and compliance are often at the forefront of a company’s strategy. Townsend suggests the regulatory environment has ‘gotten tougher’ with the FCA more focused on prudential management and compliance. He says, “We hold significant funds for some of our clients who may be worried about their money, and so they rely on our audits. We do software audits as well as other audits to reassure them, but obviously, there are regulations that we follow, with the safeguarding and segregation of funds underpinned by our platform, with client funds on one and corporate funds on a completely separate platform.
“The other thing we do is keep the vast majority of funds in our major treasury bank, and only fund the local accounts as required for payments, minimising our risk overseas. We keep the bulk of our funds in client operating accounts in the UK where we know the bank, and any issues are likely to be supported by the UK government.
“Regulation and compliance aspects are obviously large considerations, but we’re moving millions of pounds every day which brings its own challenges in terms of making sure things are under your control, and that people are trained and motivated to do the right thing. So, I think at its peak there is a constant people challenge as well as the regulation challenge, and that’s solved by getting the right people to come and work for us.”
As for Townsend, he emphasises that Vitesse takes its compliance responsibilities very seriously, adding, “ I really don’t think you can run a payments business without being pretty solid on all of the regulatory elements.”
