In this article, Alex Mifsud from Weavr shares his journey into the Fintech industry and his embedded finance solutions for businesses.
- Q: What inspired you to work in fintech and make it better for the world?
- Q: What was the premise of entropay, and how did you first start it?
- Q: What does weavr do and what do investors need to know about it?
- Q: What people can or cannot do before and after using the Weavr?
- Q: How is weavr different from other platforms?
- Q: Can you share one more example of embedded banking?
Q: What inspired you to work in fintech and make it better for the world?
It wasn’t some sort of revolution, but I am an engineer, so the way I think about the world is, whenever I do anything, my inner voice says, “is this the right way to do it” and this is what made me do everything I have been doing now.
Since the very start of my career, I sort of stumbled into financial services. I started with research in computer science, and I had some technology that I thought was very relevant to the world, and that technology led me to challenges and payments.
Payments are really interesting because they involve interactions with many types of people and organizations and human activities, but they’re also things we don’t really want to do for their own sake.
They should be there in the background. They should work; they should be secure. We shouldn’t have to think about them, and to make that happen; you need a lot of prior thinking into what could go wrong and what good looks like, and that just creates a whole bunch of mostly engineering problems to be solved.
So if you think about that as a thread through my prior businesses that I launched but also the London blockchain foundation and then Weavr, there is very much that sort of engineering thread about how we make things work a little bit better in embedded finance.
Q: What was the premise of entropay, and how did you first start it?
When entropay came out, a bunch of ideas of how to bring control back to the individual when faced with a sort of information asymmetry on the internet came to mind.
For example, when you put your email address into a registration page, you’re giving that data to somebody else, and you hope they won’t abuse you. You hope they won’t spam you or sell your email address to somebody who will spam you.
When you put in your credit card number on the embedded finance platform, you’re hoping that the merchant on the other side who might get hold of that credit card number will not abuse that card number that you have shared with them for embedded payment or use it for the purpose you’ve asked them to use.
So I was trying to solve this problem of how do you put back control on customers’ data that basically once you give it up. You can’t take it back again.
So the original idea will have nothing to do with payments, but of course, payments are one of the types of data in embedded finance that you end up giving.
I thought if you really wanted to have the control, you don’t want to give your credit card number and have it out there be handled by multiple merchants and multiple intermediaries for embedded financial services.
So I thought about what if we were to create a new card every time! We don’t have to issue a plastic card because this is for the internet, and then I thought that sounds like a good idea for embedded finance solutions.
If we issue a new card number every time we do a transaction, I really want this to be available to everybody, and I didn’t want it to tony to be available to those who would be creditworthy, who could get a credit card account; so let’s remove the credit and let’s make it not dependent on credit and then I thought about debit cards.
Then I thought, why should we even limit it to people who’ve got bank accounts? Why don’t we even remove that? And really, that’s what gave rise to the idea of a virtual prepaid card.
Q: What does weavr do and what do investors need to know about it?
You are investing in AWS for embedded finance, and it’s at a stage in the industry where it’s early enough that there are still many problems to be solved.
I would like to believe that we have solved more of the problems than anybody else has, but that’s pretty much the headline reason why an investor would be interested. Perhaps it’s not just investors.
I should be talking to all the parts of the ecosystem, whether that’s the financial institutions and the developers who also have a really big stake in how embedded finance plays out.
The whole mission of Weavr is to make it possible for any digital business to integrate any financial service anywhere in the world, and the reason behind that is because there is something so complementary between what we do with digital applications and what we try to do with financial services.
When these two worlds come together, something magical happens in the customer value proposition, and that’s what we’re looking to enable with the Weavr.
Q: What people can or cannot do before and after using the Weavr?
Let’s say you’re running a Saas business that helps restaurant owners manage their restaurants. It helps them organize their menus, organize their staff roster and decide what stock to keep.
Those kinds of things restaurant owners have to do, and then restaurant owners handle quite a lot of money. They have to buy the stock, paying their stuff, collecting money online for people who reserved and paid online. So there is an obvious complementary fit between the data you would have in restaurant management.
Saas platform and the data you would need to provide better financial services for restaurant owners, and maybe that starts with being able to accept card payments. It may also start to be able to pay your staff and your suppliers, and then it could also move on to having some sort of loan facility or working capital so that you can actually fund improvements in your restaurant or run your restaurant better.
There’s a very good complementary fit between the Saas business, which is a perfectly good business on its own. To help restaurant owners manage their restaurants, but when you add the financial services, it acquires superpowers.
So now the restaurant owner doesn’t have to go and talk to their bank manager to explain how their restaurant works. Actually, the bank is coming to the restaurant by understanding how well the data of that restaurant is frequented and what sort of margins it makes.
That’s the data, and that means finance services can be provided in context to those restaurant owners and can be pre-approved for loans. They can be provided with some supplier payment solutions that are quite optimal for them and that remove a lot of the paperwork.
For example, organizing your bills or reconciling your bank statement with what you actually were meant to pay. So bringing those two together creates a really great customer proposition.
It also creates opportunities for the restaurant owners to be able to create more revenues because now they are enabling financial services to flow through their platform.
They can also get some share of that added value in the form of incremental revenues, and then finally, when these solutions work, they’re very, very sticky because they create so much value to the end customer that no one would want to move to a competing platform where perhaps those services aren’t as well integrated. So those are the big drivers for embedded finance.
Q: How is weavr different from other platforms?
To start with something which is generally non-financial, but there’s a financial element to making that happen, and all the infrastructure to be able to get money is what weavr has special in it.
For example, there’s somebody who built an app called parking perks, and the retailer now tells their customers to just install this, and when you want to show up, it’s like an uber, but it’s for your parking and we take care of it.
Furthermore, different benefits providers want to get paid in different ways. So if you want to offer, for example, a Spotify subscription right for your millennials, then you will need them to have some sort of card where they could pay for the subscription.
If you’re looking at certain gym memberships, they’ll only get paid by direct debits again. Some other benefits providers might want to be paid against an invoice. There are different ways in which the money has to flow out.
They need to collect money from employers, and some employers will pre-fund the benefits, and some employers might be given a line of credit to pay for you. It means someone else is paying for the benefits, and then the money is collected later.
There are many different ways in which the money can flow both in and out to the benefits providers, and so then we’re looking at building this payments and banking infrastructure and what is possible now considered to be the way to do embedded banking or embedded finance which is a model called banking as a service.
Weaver understands that taking away the responsibility for compliance for risk management for all the complex transaction processing that needs to happen for these kinds of applications. It will make it so much easier for innovators to integrate financial services.
The proposition behind weaver is that our customers are able to make what ultimately becomes plug-and-play financial solutions that fit what they want to do in their product logic.
They can do it without taking on all of that responsibility for risk and compliance. It is much, much faster to do it in weeks rather than in months.
Q: Can you share one more example of embedded banking?
There is a company that I am a fan of, and they are called X-wrist. The company has come up with the idea of creating a wristband that can monitor your pulse rate, blood oxygen, blood pressure, or how much you have walked today.
They have also made a social platform around that idea that helps people to get motivated. They wanted to include payments in that device so that you can see activity as you’re on the move.
It’s easy to put a chip in a device like that, but actually building the infrastructure to be able to fund the accounts issue puts them on the chip. Because managing all the transactions is quite an undertaking and very different from the kind of skill set you need to have a device.
To actually build the software around that device, they will basically come to weaver to be able to create that experience in a completely integrated way for customers.