Vodeno's Head of Payments talks BaaS & new fintech trends

Krzysztof Hoffman is the Head of Payments at Vodeno and an expert within the payments industry with significant fin-tech, Open Banking and Banking as a Service experience. He has led the Transactional Banking Product team within ING responsible for the development of payments 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 responsibilities for all components of the Payments Platform across 16 countries offering access to solutions based on PaaS and BaaS.

We caught up with him to find out more. 

How has the recent economic climate impacted BaaS in general?

The pandemic accelerated trends like digital payments and e-commerce, and today, the winning business model is end-to-end digital because it offers the best customer experience. Fierce competition between brands vying for customers to stay engaged and the return has led them to look for innovation in their customer journey; this is where BaaS is making 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 the size of the shopping basket, 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 in consumers’ favourite brands. 

Can tech play a role in protecting SMEs from the adverse effects of delayed payments?

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

But, innovation (primarily led by fintechs) is making faster settlement times more accessible, as well as more cost-effective. For example, we offer a single API integration that auto-selects the most efficient payment rail for each transaction; this ensures the fastest possible settlement and reduces the cost of transactions with interbank foreign exchange (FX) rates and mass payment capabilities via virtual IBANs on offer. 

What would real-time payment processing entail for SMEs?

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

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 license and regulatory expertise to offer secure and compliant banking products. At Vodeno, we offer a fully API-based solution with access to a ECB banking license, as well as multiple payment options across Europe, including local IBANs. 

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

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

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

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

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

What’s more, changing regulations surrounding cross-border payments and FX will open the door to further innovation, so we will continue to improve our platform. 

What's the long-term outlook for BaaS at this point in time?

End-to-end digital will become the default expectation for all consumers. From a retail banking perspective, traditional banks optimised their front end - the parts visible to their customer - digitally, but underneath 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 clients - end-to-end digital banking products that are fully compliant. Our mission is to democratise better banking products to more people, and we are doing this via our BaaS clients, 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 the majority of people around the world.