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FairFX to push ‘fintech with a human element’ as it prepares to enter US market

In December the firm signed an agreement with New York-based Metropolitan Commercial Bank to enter into a 5-year contract to provide payments services to its customers
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The company is already seeing demand for its products in the US

The chief executive of FairFX Group Plc (LON:FFX), Ian Strafford-Taylor, has said the company is aiming to get an edge on competitors by deploying fintech overlaid with “a human element” as it prepared to widen its reach to the US market.

In December the multicurrency and e-banking services firm signed an agreement with New York-based Metropolitan Commercial Bank to enter into a 5-year contract to provide payments services to its customers.

READ: FairFX shares surge as it signs deal with Metropolitan Commercial Bank to access US market

The binding term sheet signed with Metropolitan covers both international payments and prepaid card issuance, with FairFX adding that there was “a strong demand” for its Corporate Expense platform across the US and that the agreement would allow it roll out the product more widely.

Speaking to Proactive, Strafford-Taylor said while the deal was opening a new market to the company, it already has demand in the States.

“At the moment we’re turning away business that we can’t do because the person or business is a US resident…this deal allows us to service demand that we already have” he says, adding that the amount of business currently being turned away will “more than cover any costs” arising from the deal.

The company plans to have its international payments service operational in the US by the first quarter of next year, while card issuance is planned for the second quarter.

While he can’t disclose the exact numbers around the deal, Strafford-Taylor says they “won’t be trivial” and that FairFX viewed the potential as “material both for immediate revenue purposes and also longer term”.

Bringing humanity back to fintech

When it comes to foreign transactions and multicurrency payments, the competition is stiff, with other fintech challengers like Monzo offering either cheap travel cash or zero-fee card transactions abroad.

However, Strafford-Taylor says what differentiates FairFX is “taking what fintech has to offer but overlaying it with a customer service proposition, a human element, and the full range of products”.

“We cover the whole range of products from travel cash couriers in the City to speaking on the phone to make larger transactions, whereas other companies are self-service only”.

He adds that the company also has a full-service bank account, whereas other challenger-type firms do not have the ability to support features such as direct debits, standing orders, and in-branch deposits.

The group is also less retail customer focused than most of the prominent challengers, and instead has a mix of business and retail.

“We serve both retail and business segments, but we’re less obsessed with customer numbers, we see more of an opportunity in the SME space for our range of products, whereas others tend to be focused on the retail customer numbers”

Regarding Monzo’s free foreign transactions, Strafford-Taylor says it is simply a “customer acquisition tool” that won’t last.

“You either spend your money on marketing or offer it for free, but at some point you have to monetise it”.

This is not without some evidence, as last year Monzo limited its policy on free foreign cash withdrawals using its card to £200-worth each month.

Strong second half

The group is also steaming ahead into the second half of its fiscal year despite volatility in sterling caused by Brexit concerns.

In its first half results in September, reported that revenues had practically doubled to £12.0mln from £6.1mln in the first half of last year as turnover – transactions processed – soared 146% (23% on a like-for-like basis) to £1.07bn from £434.8mln the year before.

READ: FairFX Group sees strong momentum continue into the second half

The second half of the year saw the momentum continue, with total turnover for July and August of £472.0mln, up 152% on the same period last year and 23% on a like-for-like basis.

Adjusted profit before tax leapt to £2.6mln in the six months to the end of June from £167,856 the year before while the adjusted net profit margin catapulted higher to 21.9% from 2.7%.

With shares trading around 112p, FairFX carries a market cap of £169.3mln.

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