Airwallex: payments innovation in the new world

Disruption and change underpin the rise of the fintech sector. Whether innovative, cutting-edge technologies or new, digital-first business models, success in fintech and the broader financial services industry relies in no small part on navigating this disruption. It may be why the fintech sector has been keenly watched during the COVID-19 global pandemic. Like all industries, fintech has faced its challenges – 22% of UK fintech jobs being at risk, according to one report, for example – but with many fintechs demonstrating their ability to be agile and flexible enough to diversify and actively engage in combating COVID, there has been great interest in how the sector will transition through the pandemic.

James Butland, VP of Global Banking at international payments provider Airwallex, is no stranger to change. Butland has been active in the financial services industry since 2007, working for both incumbents (including during the 2008 financial crisis) and, more latterly, fintechs. Prior to joining Airwallex, he headed up European Banking at Transferwise, managing and expanding the company’s existing European banking network and scaling up product development.

Such breadth of experience has provided Butland with valuable insight across the financial services value chain. “As you’d expect, the working environment at incumbents and fintechs is very different,” he explains. “On the one hand you have a very structured and quite formal environment that has been in place for 10 or 15 years, whereas at a fintech you’re often starting from the very early stages, running on a continuous cycle of product development and innovation. When I joined TransferWise it was still a relatively young fintech, and the same goes for Airwallex, which I joined around three years ago with the aim of building out the global banking network and infrastructure and growing the European footprint. The exciting prospect about being a part of a fintech in that sense is that you’re really building a brand from the ground up – your mission is to really find those customers or organisations that are still using incumbents and say to them ‘what do you want and how can we build a product that is 10 times better than that which you’re already using?’.”

With Airwallex, Butland is based in the UK, albeit responsible for expanding the company’s footprint into Europe. He is, understandably, a strong proponent of the UK’s position in the financial services and payments industry. “Fintech isn’t a global, one-size-fits-all industry – it’s all about tailoring your product and approach to the region you work in; we sell in China, for example, but that’s very different from the product we offer in Europe. If you look at payments, I think the UK is at the forefront in terms of regulation and market conditions, but I spend a lot of time with the Airwallex team in Asia Pacific, where they’re leading the way in terms of on the ground payments and moving money. In China, of course, there’s the development of super apps and other technologies, so every region is very different and that dictates how you operate.”

Regardless of region, technology has been the key driver of change in every sub-sector of financial services. In payments in particular, Airwallex has developed tech-driven infrastructure that enables low-cost, high-speed and transparent international collections and payments via API. “We approached the problem in a very different way to incumbents that have a bricks-and-mortar presence, instead as a ‘software layer’ across the globe that can connect all banks and locations into one unified whole. What we offer is a complete platform that other services can be added to, so you can do foreign exchange FX), collect money in different countries, create debit cards and pay for goods, accept funds and more. We don’t deal with cash, it’s all digital and done over the web through our API technology.”

Of course, that shift to digital has only increased for all businesses – and consumers – as a result of the global COVID-19 pandemic. Airwallex has proved robust despite the challenges placed on it from COVID, says Butland, and the broader shift to remote working and isolation has increased the use of digital payments and financial services tools. “We’ve a large presence in Shanghai, so we were aware of the potential implications earlier than some organisations and we pivoted very quickly to be able to manage any possible disruption. Many of the areas that we support, such as travel or education, have naturally been impacted quite badly, but there has been a significant increase in ecommerce that means we’ve been quite resilient.

“In terms of the wider shift to digital, I think that’s been happening for a while but COVID will certainly increase it,” he continues. “People haven’t been using high street banks or shops, so there is a real migration to managing finances virtually, and the pace we’ve seen it change is incredible. Businesses still need to use payments services, and to manage payments internationally, so our sector specifically actually looks very healthy – we’ve actually seen a huge rise in companies going digital and looking at new ways of making savings and improving efficiency.” To aid this, Butland adds, Airwallex waived FX fees for three months for its customers from March, which proved a timely intervention.

The economic landscape has undoubtedly proved challenging. However, despite this, Airwallex has continued its growth strategy including the closing of its largest investment round to date and raising $160mn in Series D funding. Butland explains: “The round was completed at the height of COVID, which was of course a challenging time, but it demonstrates that the fundamentals of our business haven’t really changed, we were still serving our core markets and our customers were still using the platform so we were able to show investors that we were a resilient business. If you look at fintech investment at the moment, deals are still happening, but there’s definitely questions over what that recovery will look like.”

For Airwallex, the investment will predominantly be used for the organisation’s expansion into Europe that Butland will lead. “The challenge for Europe is really around how to sell your product to individual countries and markets,” he explains. “We’re really trying to focus on not just what our customers need now, but what they may need in the future. For example, one big focus is on the ability to collect funds locally in different countries. Before we launched this product, if you wanted to launch a new business in the US, or any other country, you’d have to have a presence there. With us, you can provide some simple details and start a business on the same day, so we’re always looking at how we can improve the business and payments landscape for people and improve our offering around the world. Our entire purpose is to help people to run a business online, seamlessly, from anywhere in the world. This absolutely fits into the new, post-COVID world and that increasing digitisation we discussed, so it’s exciting that we’re helping to build that new world.”

That new world, Butland believes, will see the continued growth of fintech within financial services. “The current situation is only going to accelerate the move to a digital world as all of the things that, traditionally, we did in person will be carried out online. The longer that fintech are around, particularly digital banks like Monzo or Revolut, the greater the trust will be in them from consumers and I can see, over the next five years or so, another wave of fintech banks and services, and insurtechs, coming into the market as that proposition strengthens. It’s only getting started now, but everything is going to change beyond financial services to how we as a society consume digital technology more broadly.”