Finseta Plc (LON:FIN) Chief Executive Officer James Hickman caught up with DirectorsTalk to discuss the company’s strong interim results, international expansion, and new product developments.
Q1: James, you’ve mentioned that the UAE operation is performing ahead of expectations and that Canada has started generating revenue. Can you provide more detail on the ramp-up in those regions and how you see their contribution evolving over the next 12 to 18 months?
A1: So, these are two initiatives that we set out as part of our geographic expansion strategy, both regions, we are regulated, we have offices, so we’re operationally running. Dubai, we see significant opportunity and in fact, we’re up to nine people there. We’ve invested both time and money into this region where we see, as I say, significant opportunity.
What is slightly different and gives us a USP in Dubai is not only do we have local people there, but also very importantly, we have local banking rails there. So, we’re able to provide our customers exactly the same service that we do here in the UK, which ultimately is multi-currency accounts, which is a real USP in the region.
We’ve seen significant customer interest. As we’ve launched in Canada, it’s a much smaller operation. Having said that, we’re again operational, we have a local banking partner that is enabling us to provide exactly the same service again, which is local multi-currency accounts.
Q2: Now, we just did hear about the decline in H1, that was due to planned investments, yet revenue still grew by 16%. Could you elaborate on which areas saw the largest investment and how those are expected to impact margins and growth in the second half and perhaps beyond?
A2: One of the key things that we achieved in H1 was the launch of agency banking, which we’ve been working on for the last nine months. Ultimately, what does agency banking give us? It ultimately allows us to generate accounts under our own sort code for our customers. That has the benefit of the business being able to onboard a wider variety of customers but also, for the customers, it provides increased efficiencies in terms of payment rails.
So, we’re now connected into the UK’s local fast payments system and that’s really a stepping stone to future developments in other jurisdictions for local payment rails.
The other region, as I mentioned, was Dubai, where we’ve invested and I’ll repeat, we continue to see significant opportunities there. Whilst we acknowledge we’re a relatively small company and we certainly have heavy cost control within the business, we do invest where we know we’re going to see a good return, and Dubai is definitely one of those areas where we do see a return.
Q3: You’ve highlighted the launch of the Finseta corporate card and the implementation of agency banking as key product milestones. What kind of customer uptake or traction have you seen so far? What are your expectations for these offerings in terms of revenue contribution or user growth?
A3: I would say in terms of the strategy of the business and what we’re trying to build, we are effectively providing a digital account solution that really replaces a transactional banking solution that a customer might have. So, if you’re a business, for example, and you do all your transactions through your current provider, you could come to Finseta, and we can provide an end-to-end service for effectively transactional banking. That’s what we’re trying to build.
So, I don’t see, per se, cards as a separate product, it’s an integral product with the account solution. We’ve now started seeing customers utilising the product. We’re continuing to develop that and similarly with agency banking as well, it’s not a standalone product, per se, but it’s an enhancement of what we’ve been doing and a natural progression for the business as we grow.
Q4: OK, so what can investors expect to see from Finseta over the coming months as we move into next year?
A4: We’re still absolutely set on our strategy and just to remind people, three pillars to that strategy, one of which is geographic and regional, and we continue to ensure that where we’ve invested is going to return dividends for us.
Ultimately, again, we recognise we’re a relatively small company, so we need to make sure that those regions that we’ve set up and invested in are performing well before we start on to the next one. We are doing background work and due diligence on other jurisdictions. Realistically, we’re going to be very, very focused on both Dubai and Canada for the rest of the year.
Continued development on our digital platform and really more enhancements for customer benefit, as well as making sure that we’re creating as much efficiency and creating a scalable platform as possible, so we’ll continue to do that.
For example, in H1, actually, we have managed to decrease the account opening time from just over three hours down to just over one hour, which is a significant difference, reducing friction for clients. It’s things like that, enhancements to the business, that will make all the difference and allow us ultimately to attract more customers and do so successfully.
