As banking and payments continue to be disrupted the world over, it’s vital these changes are backed up by solid infrastructure.
When we make a contactless payment or check our balance, we don’t think about this infrastructure – and that’s the idea, according to Erlang Solutions. If everything runs smoothly, you shouldn’t need to worry about what is taking care of the plumbing.
Erlang, the computer software language invented by Ericsson in the 1990s, is responsible for around 40 to 50% of this plumbing – otherwise known as data infrastructure – across the world. Erlang provides the software building blocks for the telecoms, banking and more recently FinTech sectors. A FinTech client Erlang Solutions currently works closely with is Vocalink, a Mastercard company that provides all the infrastructure for UK banking, including the faster payments system. “All these sectors need to be able to run operations at scale, highly reliable and highly resilient,” says Stuart Whitfield, CEO of Erlang Solutions. “You should never lose a transaction.”
Erlang Solutions was founded in 1999 to offer support, consulting and development in Erlang and Elixir, another language built on Erlang. Rather than just selling a solution, Erlang Solutions works collaboratively with clients who need specific help with building highly scalable and resilient solutions, recognising that every company moves at a different pace and has different needs. “It depends on the engagement and the level of ownership an organisation has,” says Whitfield, adding it’s important to approach customers with a problem-first attitude. “We believe in using the right tool for the job and, in many FinTech cases, the type of technology in which we specialise is ideally suited.”
A key element to the company’s success, according to Whitfield, is to focus on doing one thing really well, with top talent. “Most, if not all, of our technical people are recruited solely for their expertise in Erlang and Elixir,” he explains. “It’s important to retain focus and keep a really high bar in terms of the technical stuff. That’s why we recruit people from all over – we currently have over 20 nationalities working at Erlang Solutions.”
In its mission to not only keep the infrastructure working, but also help companies make the most of it, Erlang Solutions works with clients of all shapes and sizes, from decades-old telcos to new tech companies and FinTechs (it counts Ericsson, WhatsApp and Klarna among its clients). Citing change management and legacy software as key challenges for incumbents, Whitfield notes FinTechs have the opportunity to start off on the right foot with their culture and tech. “It’s not difficult to get your infrastructure design right and scalable from day one,” he notes. “If, as a startup, you’re a screaming success, the last thing you want is to have to re-engineer the back end of your live system when it starts to struggle to deal with customer and transaction volumes, resulting in customer complaints and transactions slowing down – or worse, being lost.”
When faced with the ‘buy or build’ conundrum, outsourcing and collaboration should be embraced by FinTech startups – as Whitfield puts it, “you wouldn’t build your own computers or generate your electricity”. “Startups need to think about the core part of their proposition that only they can do and that’s core to their mission – and do that really well. Almost everything else can be outsourced (and done better) by experts.” Then, and only then, can they look to scale nationally and globally.
As an example of scale, Erlang helped Vocalink build its Immediate Payments Solution (IPS) to expand internationally and IPS is now in use in Singapore, Thailand and the US. Vocalink’s innovative technical solutions were a key driver behind its international growth strategy that prompted Mastercard to acquire the business in 2016.
Scaling payment solutions internationally can bring opportunities such as faster payments to more and more people – helping improve financial inclusion in the process. “FinTech has enabled those who are financially disenfranchised: getting a cheap smartphone has been pretty easy in parts of Asia and Africa,” says Whitfield. He’s particularly proud of Erlang’s work with M-Pesa, a Kenyan mobile platform that enables peer-to peer payments. The company felt it was missing a trick by not building a community around its 30mn users, so turned to Erlang Solutions, which helped build a messaging layer, based on the company’s MongooseIM open source messaging product, so people could communicate as well as make payments, offering a more sophisticated and engaging user experience.
As well as making waves in emerging markets, the FinTech movement also has the potential to democratise finance here in the UK, which Whitfield is also passionate about. Currently, even here in one of the leading financial services economies, those who are unemployed or do not have a bank account suffer exclusion from the world of finance. “The irony is that the poorer you are, the more you have to pay for the money you get and the harder it is to conduct the financial transactions that most of us take for granted,” says Whitfield. “Technology is changing that. For instance, peer to peer lending is making borrowing small amounts easier and cheaper and, in future, mobile payment transaction costs will be much lower.”
Underpinning some of the most disruptive organisations across a variety of sectors, Erlang continues to provide the infrastructure enabling some of the key developments we’ve seen across payments and banking in recent years, but you probably won’t have heard of the company that looks after the plumbing – which means Erlang Solutions is doing its job.