Vodeno’s payments manager talks about BaaS and new fintech trends

Krzysztof Hoffman is head of payments at Vodeno and an expert in the payments industry with significant experience in fintech, Open Banking and Banking as a Service. He has led the Transactional Banking Product team at ING with responsibility for the development of payment products and services. In his current role, Krzysztof is responsible for building the payment platform for Aion/Vodeno, with extensive experience in transformation, banking and operations. He has end-to-end product management and development responsibility for all components of the payment platform in 16 countries that offer access to solutions based on PaaS and BaaS.

We caught up with him to find out more.

How has the recent economic climate affected BaaS in general?

The pandemic accelerated trends such as digital payments and e-commerce, and today the winning business model is end-to-end digital because it provides the best customer experience. Fierce competition between brands fighting to keep customers engaged, and the returns have led them to look for innovation in the customer journey; this is where BaaS makes its mark.

Today, with the right BaaS partner, any brand can embed financial services directly into its ecosystem where transactions naturally occur. This directly increases cart size, conversion and repeat visits. We believe that in the near future people will do less of their banking with traditional banks, instead relying on “platform banking” where innovative financial services – powered by BaaS – will be integrated into consumers’ favorite brands.

Can technology play a role in protecting SMEs from the negative effects of late payments?

Late payments can be a major pain point for SMEs with limited resources and can have a significant impact on their ability to scale up.

But innovation (primarily led by fintechs) makes faster settlement times more accessible, as well as more cost-effective. For example, we offer a single API integration that automatically selects the most efficient payment rail for each transaction; this ensures the fastest possible settlement and reduces the costs of transactions with interbank exchange rates and bulk payment options via virtual IBANs offered.

What will real-time payment processing mean for SMEs?

According to our survey, 62% of SMEs consider delayed and unpredictable cash flow to be the biggest challenge they currently face, and (54%) state that their company was forced to take out loans as a result of non-payments which caused a disruption of cash flow. Real-time processing will eliminate these problems at the source, allowing businesses to better manage cash flow.

How can BaaS providers ease the process of cash flow challenges faced by SMEs?

Not all BaaS providers are created equal – some may provide the technology but lack the necessary licensing and regulatory expertise to offer secure and compliant banking products. At Vodeno, we offer a fully API-based solution with access to an ECB banking license, as well as multiple payment options across Europe, including local IBANs.

With the license of our partner Aion Bank, we not only have the security and guarantees of a regulated European bank, but we can also offer the full range of banking products from payments to accounts to lending.

Do you see the pressure easing anytime soon? Or is this something the suppliers must have a long-term strategy for?

SMBs no longer need to rely on legacy banks for one-size-fits-all payment solutions.

Our research found that 68% of SMB decision makers planned to adopt real-time payment processing in the next 12 months, suggesting that positive change is approaching in pace.

Vodeno’s strategy in the payment area is to offer several ways through our platform to meet the customer’s needs and deliver it in a simple solution that is easy to integrate and cost-effective. We can connect the front end of any client to provide turnkey, compliant banking services on the back end, allowing brands to do what they do best – make customers’ lives easier, save/or grow money, or solve an unmet need.

In addition, changing regulations around cross-border payments and currency will open the door to further innovation, so we will continue to improve our platform.

What is the long-term outlook for BaaS at this point?

End-to-end digital will become the default expectation for all consumers. From a retail banking perspective, traditional banks optimized the interface – the parts visible to their customers – digitally, but underneath the processes were still completed manually, requiring expensive headcount. End-to-end digital is important because it provides the best customer experience and is the most cost-effective operating model.

For BaaS, this is exactly what we offer customers – end-to-end digital banking products that are fully compliant. Our mission is to democratize better banking products for more people, and we do this through our BaaS customers, offering consumers innovative financial services in the places they visit most, when they need them.

The number of brands offering financial services will only grow in the future, and “platform banking” will become the preferred way of banking for most people around the world.