“At the moment, there’s an explosion of complexity in payments. Payments businesses have yet to solve that complexity for merchants,” says Jonathan Hughes, Co-Founder, President & Chief Operating Officer of UK FinTech Pollinate.
Hughes has 25 years’ experience in financial services, having previously worked at Worldpay whilst it was under private equity ownership and at Bain & Company, but what really excited him about Pollinate was the chance to do something “genuinely different to the historic direction of the payments industry, and genuinely useful to merchants”.
Pollinate was founded with a keen awareness that banks are under increasing attack from FinTech players, and must step up to compete. The Pollinate platform aims to connect banks and SMEs, offering merchants a chance to manage payments, understand what they mean, and grow their business with their own loyalty and offers scheme – all in one place, with fully integrated data flows. The company is behind NatWest’s Tyl product, which launched in 2019 and allows merchants to start taking payments within a day of application.
It’s this blend of agility, innovation and a strong understanding of the existing landscape that gives Pollinate its edge. “Banks have an enormous amount of trust, customer relationships and data,” says Hughes, adding that this is why the business, whose offices overlook the Bank of England in the heart of London’s traditional financial district, decided early on it would work with banks as partners.
The experienced founding team – including Alastair Lukies CBE, who is chairman of FinTech Alliance, co-founder of Monetise and member of the Prime Minister’s Business Council – was instrumental in building these relationships and understanding the pain points faced by today’s financial institutions – as Hughes demonstrates. “The big challenge banks have is the vast majority of spend, people, energy and effort is around managing their core banking technology,” he outlines.
“Legacy technology needs quite a lot of work to keep the lights on. They’re also still being absolutely hammered by regulators – quite rightly – over the fallout from the global financial crisis. So the whole mindset at the moment is keep the lights on, manage risk… there’s very little left over for innovation.”
That’s where FinTech partners can come in: bringing technology that doesn’t eat up resources within the bank itself. However, as Hughes is quick to point out, such partnerships are mutually beneficial. “FinTechs need more of that bank-like sense. While banks need the innovative, risk taking mindset, the FinTechs sometimes don’t have enough of that ‘steady as she goes’ mentality to manage risk, security and compliance.”
Hughes says partnerships allow Pollinate to move “in parallel” to banks, which is a lot faster than trying to overhaul legacy tech. “You intersect the bank’s systems; if you had to do a hard integration it would be really time consuming and complex. We take data feeds from banks and processing partners and transform the data within our technology so it’s easier to wrap around the bank’s core system,” he explains.
It’s a model that’s fast gaining traction and attracting investment. At the end of 2019 Pollinate closed a funding round that brought its total raised up to £60mn. The round included backing not just from RBS but also global payments giant Mastercard, a company Hughes says he sees huge potential to work with. “Mastercard is a fantastic investor and partner with a global reach and a suite of products that meet the needs of banks and their merchants.”
Mastercard’s global reach will be especially beneficial on Pollinate’s expansion journey – at this stage, the FinTech is looking for more than capital. “We like to work with investors that aren’t just financial investors, but who also bring something to the table in terms of their own experience and view of the market, helping us grow the business,” says Hughes, adding that it’s common for a FinTech to look for expertise and ability to help more broadly with the business.
This journey of expansion has taken Pollinate to Australia, South Africa and Canada in recent months. “In each of those markets we’ve spoken to most of the big banks, and we’ve already got several banks that will continue to work with us,” says Hughes, citing the NatWest success as a key driver of these relationships. “The key to international success has been our credible story of getting the UK’s biggest bank back into the acquiring market.”
As engaging with traditional banks becomes increasingly important for FinTechs, what advice does Hughes give for those seeking to build a strong partnership? “The key point of dealing with banks is to figure out the right way to engage with them and the right level,” he explains. That’s why Pollinate’s experienced team has been so important. “We’re able to engage with banks at a senior level; it’s a top down approach because what we do is more strategic for the bank. But if you’re a younger entrepreneur, the key is to understand who you’re selling to and make sure you’re talking to the right people.”
As well as looking to new markets, Hughes is equally excited about the plans to build on Pollinate’s core product offering and being able to respond to the needs of SMEs in the current crisis, with an Open Banking payments platform and an order-ahead interface to help cafés and restaurants manage their takeaway and delivery customers. “Both of these solutions enable our bank partners to deliver real benefits to their merchants – Open Banking gets payments to merchants faster and cheaper, and the order-ahead functionality allows a small business to get back to serving their customers when their physical premises are closed.”
For Pollinate then, no matter how many partners it gains, the focus will remain on enabling small businesses to grow through reliable, easy to implement tech – which in the years ahead will be more critical than ever before.