Despite the rise of digital banking, transferring money between countries remains a slow and cumbersome process, with transactions typically taking anything from two to five days. UK fintech Banking Circle aims to cut that time to a matter of minutes. Tech Monitor spoke to CIO Michel Andre about the infrastructure transformation he is leading in order to make that happen.
Banking Circle provides digital infrastructure that underpins payments. It is used by payment providers and retailers including Stripe, Shopify and Paysafe. Last year it was involved in 10% of B2C transactions online, the company says, and it helped settle B2B e-commerce transactions worth €100bn.
Cross-border payments are core to Banking Circle’s offering, Andre explains, and it has built its technology infrastructure to make them as fast as possible. “We use technology to provide compliance and cut down on manual handling of transactions, and we are not encumbered by any legacy systems.”
The company has also developed relationships with clearing houses, institutions that record and confirm financial transactions, all around the world. “A lot of the established players are connected to their local clearing systems but have not built a system where they are interconnected with other countries, and that’s what we do,” he says. “This combination of technology and the relationships we have with institutions in different countries allows us to do things at greater speed and lower cost.”
Though the overall volume of money transfers around the world dipped during the Covid-19 pandemic, Andre says many of Banking Circle’s clients are e-commerce companies whose payment volumes have skyrocketed as shoppers flocked online. “We’ve seen a healthy growth in the number of payments,” he says. “There was a small slump in March and April last year, but it picked up rapidly because a lot of the payments we serve are backed by web-based businesses.”
Banking Circle CIO on moving to the cloud
Although Banking Circle claims its cross-border payments are among the fastest on the market, the company is always seeking to accelerate. Andre is currently in the process of re-engineering its core infrastructure to improve transaction time and boost application development.
Cloud has been “part of the strategy” since Andre arrived at the company in 2018, and its front-end and client touchpoints are already cloud-native. But until recently, its core banking systems were supported by a managed service that was a bottleneck for development. “If you needed to order it took months, and you had to make purchase requests and change requests,” Andre recalls. “We develop a lot ourselves, and do bi-weekly releases, which was close to an impossibility in our old set-up.”
Earlier this year, Banking Circle migrated these core system to the Azure Cloud. This, Andre hopes, will not only “reap operational efficiencies” but also enable continuous delivery for its development team. “We’ll be able to release things very quickly to clients,” he says. “So they’ll be able to see the direct benefits of this change in everything from fixing minor defects to adding new features and capabilities in a more streamlined manner.” The changes include a move to an event processing system, where updates based on live use cases can be made in real-time to help optimise the client’s day-to-day workflows.
The company chose Azure because it was the closest fit to its internal architecture, Andre says. “Their stack is more coherent from development environment to operational environment, compared to other providers where there is a bit of a disconnect,” he explains. “They also have good provisions for financial services in terms of compliance programmes and things like that, where the other players weren’t as mature.”
Indeed, Banking Circle had to get regulatory approval to move workloads to the public cloud. Andre says clients have not raised any security concerns despite the cloud often being perceived as more of a security risk. “We haven’t had any objections, I think they’re quite happy we can move fast and scale,” he says. “Security is a top priority item and I think the cloud providers actually have more capability of investing in security than we would have if we had hosted it ourselves. We’ve done a lot of investigations on the security side and haven’t been able to expose any weaknesses.”
For the Banking Circle tech team, Andre says the biggest challenge has been learning to work with a cloud mindset. “There is a bit of a learning curve to manage this kind of environment,” he says. “We probably have some work to do in terms of learning to use the public cloud and the way it allows you to scale up and scale down. That’s not something that comes naturally, and it requires some minor changes on the skills side and also in the way we operate.”
Open APIs key to Banking Circle’s future
Banking Circle’s success has derived in part from its APIs which allow customers to integrate payment services into their own infrastructure, Andre says. “We’re primarily a B2B business so we want our clients to integrate our systems deep into their workflows,” says Andre. “One of the problems for legacy payment solutions is that they are often based on file exchange. If you want to move to quicker transfers files don’t really cut it, because you have to drop a file and wait for a response back.”
Ninety-eight per cent of our flow is through open APIs and direct integrations, and that has been a key part of our strategy.
By contrast, APIs allow you to instantly access information, Andre says, meaning the whole process can be accelerated. “Ninety-eight per cent of our flow is through open APIs and direct integrations, and that has been a key part of our strategy.”
The next step for the company is to take advantage of the artificial intelligence capabilities the cloud offers to help identify potentially fraudulent transactions. “We want to take machine learning and apply it to the anti-money laundering regulations and compliance,” Andre says. “It will be able to help us cut out some of the steps which are still done manually. We are also looking to move more of our reporting to cloud-native systems, to utilise the big data capabilities that are inherent in public cloud. Our reports are already fully automated, but we think we can offer a more sophisticated service to our clients.”