Even before the threat of the global pandemic, the seed of virtual banking started to sprout due to the technological race in recent decades. From the evolution of broadband internet infrastructure to 5G and satellite internet access, the internet has transformed how people work and merchants operate, giving rise to virtual banking.

However, besides these technological advancements, many other factors have propelled the emergence of virtual banking and how this is different from traditional banks.

Fintech News sat down with Marc Evans, Chief Operating Officer of Swiss-licensed fintech Klarpay AG, to discuss the company’s emergence in virtual banking.

What is the story behind the company’s inception, and what’s your target market?

Experience has shown that traditional banks have been unable to fully grasp and catch up with the evolving needs of e-commerce. Despite their efforts to accommodate more use cases, increasing compliance requirements from regulatory authorities have made it rather unattractive for traditional banks to adapt their operations to fully serve e-commerce platforms.

Consequently, these banks’ approach would be to embed arduous control processes without fully understanding their clients’ businesses or simply refusing to onboard such businesses altogether, leaving them with no option but to seek alternatives. In their quest for survival, these entities end up with non-banks in less regulated jurisdictions moving down the ladder. As such, they spend more time maneuvering their banking solutions to adapt to regulatory and compliance requirements when they should be focusing on upscaling their business.

At Klarpay, our mission is to solve the mismatch between the needs of modern companies and antiquated systems and processes offered by traditional financial institutions by having a deeper understanding of our clients’ business models as well as addressing and managing risks directly. Our solutions target various enterprises, and our product offerings are built to position online businesses for continued growth.

Virtual banking is often mistaken for internet or e-banking, which are two different concepts. Could you share your thoughts on this?

The terms, at first glance, appear synonymous. However, the distinction can have a significant impact on the services offered. E-banking is an internet-based option offered by regular banks as part of their efforts to digitise their customer experience.

Customers can view their account balance, transaction history, and send and receive money over the internet. However, the issue is that these online portals are built upon the bank’s legacy infrastructure, and it’s a huge undertaking for these banks to modernise their underlying systems. I know of cases where banks embarked on changing or updating their core systems only to abandon these projects mid-flight. The result being that the client is left with the same inefficient and limited experience.

A virtual bank has no physical branches and handles all transactions via the internet, email, ATMs, and mobile check deposits. Meanwhile, in virtual banking, all transactions are handled online. In Klarpay’s case, our transactional banking services are provided using our proprietary systems that enable rapid adaptation.

What are the challenges the emerging e-commerce and fintech market is facing with regard to payments, and how does Klarpay’s offerings compare to traditional institutions?

Traditional banking institutions have yet to match up to the fast-paced nature of e-commerce today. As a result, their clients face challenges in payments reconciliation and inefficient cross-border payment options leading to issues and delays in processing transactions.

At Klarpay, we’ve tailored our products to solve these challenges. We understand that businesses without standardised payment solutions have incurred severe losses, lower customer retention, and even sometimes faced legal liabilities.

With Klarpay’s virtual IBANs, businesses can assign IBANs to individual customers or suppliers to help simplify payment reconciliations, eliminate delays or mix-ups, and improve customer experience.

Likewise, Klarpay’s payments API is designed to seamlessly integrate into any e-commerce system, making it easy to pay employees, suppliers, and customers. Businesses can also bring our solution into their own ecosystem, eliminating the need for back-office personnel to copy payment details, check payment statuses, and match transactions between systems.

Our cross-border international payment options are optimised, enabling fast and secure global transfers in over 90 countries and 70+ currencies. Online businesses will also benefit from our virtual debit cards for online or in-store payments via Google Pay or Apple Pay.

Any expected launches by Klarpay?

Klarpay has recently expanded its international payment capabilities by launching dedicated USD and GBP Accounts. This addition enables digital companies to collect and disburse USD and GBP payments globally via their corporate Klarpay account. Our product roadmap extends into the future, with other significant releases planned. We’re also refining our existing tools to improve our client’s experience and efficiency.

What is your opinion on the future of paytech, and how is Klarpay preparing for it?

Paytech is evolving at a rapid rate. We’ve seen a monumental shift in consumer behaviour and preferences, with transactions going from offline to online and financial institutions and companies evolving from brick-and-mortar to virtual. From the advances we’re seeing today, it’s clear that the future will be characterised by an omnichannel experience where customers can seamlessly switch between payment methods.

At Klarpay, we’re familiar with the multitude of innovations in the payments space and their potential for our product offerings. Whilst Klarpay is a new player in the industry, we’re growing and evolving quickly. Our strength lies in our agility and the ability to develop solutions that ensure continuous business growth, sustainability, and success for all stakeholders.