In a recent interview with Finbold.com, a cross-border payment firm Wallter.com Chief Executive Officer Isaac T. Armoni talked about the banking sector’s future trends where he focused on open banking, blockchain, and cryptocurrencies.
Furthermore, Armoni explained the existing opportunities between challenger banks and traditional banks in the future. At the same time, he highlighted how the Covid-19 pandemic offered the perfect ground for eliminating cash transactions in most countries.
The executive affirmed that cryptocurrencies are here to stay and delved into Wallter’s stand on venturing into digital assets trading. He also talked about the payment industry’s overall outlook, considering that many players are joining the sector. Lastly, Armoni shared his views on the regulatory landscape under cross-border payments in the coming years.
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How has the market reacted to Wallter services so far? What are your current numbers in terms of users and revenue?
“Wallter® was founded in 2017 and began its activities in Q1 of 2018. At the end of 2020, Wallter was situated at one of the top 5 Electronic Money Institutions (EMIs) in Lithuania and the top 3 in the profit line. Wallter provides services to corporations only at this stage. We keep client data confidential – this is one of our priorities. However, as the Bank of Lithuania supervises us, you may see some of the information published on Bank of Lithuania’s website”.
How is your business model different from some of the more typical payment companies?
“Wallter®’s main business model is based on 2 pillars – our compliance and technology expertise. Combining these 2 pillars together with our tailored and personal customer service and account management makes Wallter® very different from other market participants. The DNA of Wallter® team members and senior management sets a unique and different client experience and better payment solutions”.
What is your take on challenger banks like Revolut? Do they pose a threat to traditional banks as well your business?
“We think that Revolut changed the game in the market of individual accounts, FX, and transfer of money for individuals. We don’t see a direct threat by Revolut, and we welcome all market players who want to offer the market a better solution, who plays fair and complies with all regulatory requirements like Wallter® does.
Good examples of other Fintech companies make people trust Fintechs and the services they are providing. The innovative business models are attractive – EMIs and challenger banks offer services in the way and in areas that traditional banking failed. We can see the traditional banks cooperating with EMIs and challenger banks, especially in an open banking field. It’s a welcome change to the market and will be beneficial for customers”.
The report published by Wallter indicated that cash withdrawals in the UK plunged by 46% due to the pandemic. In your opinion, what does this mean for the use of cash in the next 5 years? Maybe is cash the problem from which all the shady activities stem?
“We see a world trend in eliminating cash as means of payment. The popular opinion is that the Nordic countries will be among the first ones to go completely cashless, and there is even a date predicted for this to occur – March 2023.
Other countries are exploring the possibilities. I personally think that Covid- 19 presents an amazing opportunity to eliminate cash transactions. Using other payment methods (electronic, smartphone, or card, to name a few) is more and more popular where one does not need to touch and foreign objects. Needless to say, cashless activities assist local government in tax collection, undeclared capital, and tax evasion”.
In the wake of PayPal permitting cryptocurrency transactions, where does Wallter stand in terms of enabling digital currency payments? With firms like PayPal embracing crypto, are digital assets the money for the masses?
“Wallter® is an EMI regulated in Lithuania, we further hold licenses in the United Kingdom and Singapore. Our license does not allow Wallter® to buy or sell cryptocurrency on our platform. However, we have signed an agreement with a 3rd party licensed crypto exchange which will be providing ancillary services to Wallter® and allow Wallter® clients to view their cryptocurrency online on their Wallter® account and when they will want to buy or sell the cryptocurrency, they will be redirected to our service provider who will assist them in this request.
Wallter® thinks that EMI will be able to facilitate the FIAT to FIAT aspects of cryptocurrencies – which means at the exit and entry points to the cryptocurrency world. We do not intend to participate in any cryptocurrency exchange, buying, or selling and adhere to our regulator.
Cryptocurrencies are here to stay. When PayPal, Tesla, Mastercard, and other Fortune 500 companies declare that they are opening their platforms to cryptocurrencies, allowing people to transact using cryptocurrency in retail and online (e-commerce), we can safely identify a market trend, and we think that cryptocurrencies, blockchain, and open banking are the future of the banking industry”.
What payment trends have you seen during the pandemic? If there are any trends, which ones do you expect to stick around?
“As discussed in this article, electronic methods of payments have been on the rise in 2020. We see a rise in all online related merchant activities, specifically – payment initiation services which were introduced with the PSD2 directive.
Another trending innovative payment service – account information – is bringing a new perspective on how you should manage your funds. The artificial intelligence tools implemented by Fintech companies collect and accumulate data making everyone’s life easier. With people locked up at home, with restrictions on movement, travel, and retail shopping, we see an increase and surge in online purchases, e-commerce, gaming, etc. While writing these lines, it is obvious that the pandemic will be with us for another year or so. Therefore, we think these trends will stick around.
It will take 3-5 years until the world will return to its status pre the pandemic. We do believe online payments and digital banking will remain an integral part of our lives”.
Considering the payment sector is witnessing a surge of new players, has the industry reached its peak?
“No. While we see a lot of application for a license in Lithuania and Singapore, we also see a massive process of elimination of those companies who don’t offer adequate compliance procedures (KYC, AML, monitoring, safeguarding, risk scoring, etc.) and the regulator is enforcing through fines and license revocation a healthy dilution of the new players. We think that competition brings better results, practices, and solutions to the market”.
How do you see the regulatory landscape evolving in the next two years under the cross-border payment sector?
“In the past few years, we are experiencing a tightening of the regulatory landscape of the central European bank with regards to cross-border payments.
Regulatory procedures and regulations are welcome tools to provide a safer and more functional market. However, over-regulated landscapes may increase compliance costs, send an opposite message to international players to migrate to more convenient jurisdictions, and operate in more favorable regulatory landscapes.
We think that soon the forces of the regulator and the market will find its equilibrium point. At the end of the day, market participants like Wallter® exist in order to stimulate the payment market, make it more efficient and cost-efficient so we assume that the regulatory landscape will reflect that”.
What disruptive technologies do you think will stand out in 2021?
“Blockchain and open banking are the technologies that we need to follow and see how they develop and incorporate into the traditional services.”
What is the Wallter® expansion roadmap for the next two years?
“Wallter® will be launching its cryptocurrency cooperation very soon, and we expect the transaction volume to grow by 700% in 2021.
We are also doing a pilot regarding providing services to individual clients. We are in the process of developing a quick, efficient, and easy-to-use smartphone application that will allow our clients to transact using their smartphones. We are also expanding our team to comply with all regulatory aspects we need to comply in this road”.
The end of the interview.
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